Small-cap mutual fund category gains 10% in 2026;mid-cap in.

The small-cap mutual fund category has outperformed the mid-cap category in 2026 so far, but does the trend hold over longer periods? While category averages reveal a changing picture across three- and five-year horizons, individual schemes show a wide divergence in performance.

Small-cap mutual funds have outperformed mid-cap funds in 2026 so far, with the small-cap category delivering average returns of 9.89%, while the mid-cap fund category has posted negative returns of 1.02% as of 8 October.

However, the performance gap narrows over longer investment horizons, with both categories delivering double-digit annualised returns over three- and five-year periods.

Over the 3-year period, mid-cap funds have delivered a CAGR of 13.89%, marginally higher than the 13.81% returned by small-cap funds. Over 5 years, small-cap funds have taken the lead, delivering returns of 13.99%, compared with 12.69% for mid-cap funds.

However, category averages mask significant differences in individual scheme performance. Some funds have delivered returns well above their category averages, while others have lagged considerably. Here is how the top-performing schemes in the two categories compare across different investment horizons.

Which small-cap and mid-cap funds have led returns in 2026 so far?

Small-cap funds have recorded stronger category-level performance in 2026, with Bank of India Small Cap Fund leading the category with a year-to-date (YTD) return of 31.62%.

Among mid-cap funds, HSBC Midcap Fund topped the list with a YTD return of 11.45%, highlighting that despite the category’s average decline, several schemes have continued to deliver positive returns.

Small-cap funds	YTD return (%)	Mid-cap funds	YTD return (%)
Bank of India Small Cap Fund	31.62	HSBC Midcap Fund	11.45
TrustMF Small Cap Fund	25.76	Bandhan Mid Cap Fund	7.17
Samco Small Cap Fund	24.43	JM Mid Cap Fund	6.64
Union Small Cap Fund	20.48	WhiteOak Capital Mid Cap Fund	4.78
Motilal Oswal Small Cap Fund	18.92	Taurus Discovery (Midcap) Fund	4.66

*Source: Morningstar, Direct plans, Returns as on 8 October 2026

On the downside, HDFC Small Cap Fund was the only small-cap scheme to post negative YTD returns, at -2.64%.

The mid-cap category saw a wider spread of losses, with 16 schemes posting negative YTD returns. Franklin India Mid Cap Fund declined the most, by 5.94%, followed by Tata Mid Cap Fund at 4.46% and Sundaram Mid Cap Fund at 3.43%.

Which small-cap and mid-cap schemes have delivered the highest 3-year returns?

Over three years, ITI Small Cap Fund led the small-cap category with CAGR returns of 22.44%. Among mid-cap schemes, HSBC Midcap Fund topped the list with 21.68%.

Small-cap funds	3-year CAGR (%)	Mid-cap funds	3-year CAGR (%)
ITI Small Cap Fund	22.44	HSBC Midcap Fund	21.68
Bandhan Small Cap Fund	22.12	Invesco India Mid Cap Fund	21.35
Bank of India Small Cap Fund	21.06	WhiteOak Capital Mid Cap Fund	19.79
Invesco India Small Cap Fund	20.89	Edelweiss Mid Cap Fund	18.84
Mahindra Manulife Small Cap Fund	18.13	ICICI Prudential Mid Cap Fund	18.82

*Source: Morningstar, Direct plans, Returns as on 8 October 2026

At the lower end, HDFC Small Cap Fund recorded the lowest three-year return among small-cap schemes at 9.07%. SBI Midcap Fund lagged its mid-cap peers, with 3-year CAGR returns of 8.89%.

Which small-cap and mid-cap funds lead over five years?

Small-cap funds have a stronger showing over five years, with Bank of India Small Cap Fund delivering a CAGR of 18.95%. In the mid-cap category, Motilal Oswal Midcap Fund led with five-year returns of 18.86%.

Small-cap funds	5-year CAGR (%)	Mid-cap funds	5-year CAGR (%)
Bank of India Small Cap Fund	18.95	Motilal Oswal Midcap Fund	18.86
Invesco India Small Cap Fund	18.32	Invesco India Mid Cap Fund	17.54
Bandhan Small Cap Fund	18.07	HSBC Midcap Fund	16.66
Quant Small Cap Fund	17.96	HDFC Mid Cap Fund	16.63
ITI Small Cap Fund	17.33	Edelweiss Mid Cap Fund	16.14

*Source: Morningstar, Direct plans, Returns as on 8 October 2026

Kotak Small Cap Fund recorded the lowest five-year return among small-cap schemes at 11.1%, while PGIM India Midcap Fund was at the bottom of the mid-cap category at 8.91%.

Which small-cap and mid-cap funds feature across all three periods?

Bank of India Small Cap Fund and HSBC Midcap Fund were the only schemes to feature among the top five performers in their respective categories across all three periods.

The data shows that category-level returns do not tell the whole story. Small-cap funds have led on average in 2026 so far and over five years, while mid-cap funds have a slight edge over three years. Individual scheme returns also vary significantly within each category.

Disclaimer: Moneywealth research provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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