New Delhi, June 3 -- Small cap funds have rallied recently despite the ongoing uncertainty, delivering category average returns of 7.76% in the three months to 31 May, compared to 3% for mid cap funds and negative 4% for large cap funds.

With this, investor interest in small cap funds appears to be gaining fresh momentum. According to data from the Association of Mutual Funds in India (Amfi), small cap funds drew net investor inflows of Rs.6,885 crore in April, the highest in a year.

Here's a look at how small cap funds have performed, what's driving this rally, and what investors should do.

Small cap funds delivered a category average return of 3.13% over six months and 6.42% over one year (as of 31 May 2026). However, their long-term...