Launched on July 18, 2025, the scheme delivered a return of 8.5% since inception, compared with a 1.25% decline in the BSE 250 SmallCap Total Return Index (TRI) over the same period, resulting in an outperformance of 9.75 percentage points, according to the fund house.
The scheme maintained an average allocation of more than 85% to small-cap stocks since inception, with no exposure to large-cap stocks. As of June 30, 2026, small-cap companies accounted for 87.34% of the portfolio, while the remainder was invested in mid-cap stocks and cash equivalents.
The fund’s portfolio comprised 93 stocks as of June 30. The top 10 holdings accounted for 28.62% of assets, while no single stock had a weight exceeding 4.18%, reflecting a diversified portfolio. The asset manager also said 42 of the 93 holdings were outside the BSE 500 index, representing around 40% of the fund’s net asset value.
The fund saw strong gains during the market rebound after the correction earlier this year. Between March 23, 2026, and June 30, 2026, the direct plan returned 29.34%, compared with 24.84% for the benchmark. Over the six months ended June 30, the scheme delivered 24.98%, against 11.41% for the benchmark.
According to Value Research, a monthly SIP of ₹10,000 in the fund’s regular plan over one year would have grown to approximately ₹1.35 lakh against a total investment of ₹1.2 lakh, translating into an annualised return of around 23.9%.
However, SIP returns over a one-year period may not be indicative of future performance, particularly in the volatile small-cap category.
Explaining its outlook, Bajaj Finserv Mutual Fund said it remains constructive on the small-cap segment, citing improving corporate balance sheets, an expected recovery in earnings and lower valuations following the recent correction.
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According to the fund house, net debt-to-equity in the broader small-cap universe has declined to near zero from 0.52 times between FY19 and FY26, while return on equity has improved to 12% from 9%. It also said earnings per share for the small-cap index are projected to grow at a more than 20% CAGR during FY26-FY28, while around 45% of small-cap stocks are currently trading below their 10-year average valuations.
The asset manager also highlighted rising domestic institutional ownership in small-cap companies, driven by steady systematic investment plan (SIP) inflows.
Small-cap funds are among the riskiest equity mutual fund categories due to their higher volatility. Financial advisers generally recommend such schemes only for investors with a high risk appetite and a long investment horizon. Investors should not rely solely on one-year returns while evaluating a mutual fund, as past performance may or may not be sustained in the future.
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