Bandhan Small Cap Fund may not have topped the performance charts in June, but its long-term track record, consistent SIP returns and active portfolio management continue to make it one of the most closely watched schemes in the small-cap category. Data from FinAlpha shows the fund has outperformed its benchmark across multiple time periods while maintaining a diversified portfolio and regularly reshuffling its holdings to adapt to changing market conditions.Advertisement
The fund delivered a return of 3.23% in June, lower than category leaders such as Invesco India Smallcap Fund (8.40%), JM Small Cap Fund (7.62%) and Motilal Oswal Small Cap Fund (7.59%). The Nifty Smallcap 250 TRI, meanwhile, gained 4.34% during the month. While Bandhan lagged some peers in June, its longer-term performance remains a key reason behind its popularity.
Strong long-term outperformance
One of the fund’s biggest strengths is its ability to outperform the benchmark over extended periods. Over the past three years, Bandhan Small Cap Fund has delivered a CAGR of 28.69%, compared with 19.62% for the Nifty Smallcap 250 TRI, generating an alpha of around 9.2 percentage points.
Its five-year CAGR stands at 30.68%, comfortably ahead of the benchmark’s 16.05%. The fund has also generated positive alpha over one-year, three-year and five-year periods, highlighting consistency rather than one-off outperformance. In a category known for sharp swings, sustained long-term returns often matter more than monthly rankings.Advertisement
MUST READ: New fund launches in July: Axis, Mirae, Motilal Oswal launch new passive funds
SIP investors have benefited
The fund has also rewarded investors who have invested through systematic investment plans (SIPs). According to FinAlpha’s analysis, Bandhan Small Cap Fund has beaten the benchmark across all SIP periods measured.
For retail investors, SIP returns are often a more meaningful indicator than lump-sum performance because they reflect wealth creation across different market cycles. Consistent outperformance through SIPs suggests the fund has navigated both rising and volatile markets relatively well.
An actively managed portfolio
Bandhan Small Cap Fund has also remained actively managed rather than simply tracking market movements.
Between December 2025 and May 2026, the fund added 53 new stocks and completely exited 33 holdings, increasing the total number of stocks from 238 to 251. Despite these changes, portfolio turnover stood at 17%, indicating that the fund manager made selective adjustments instead of excessive portfolio churn. Such activity reflects an effort to capture emerging opportunities while reducing exposure to stocks where growth prospects may have weakened.Advertisement
MUST READ: Which AMCs have crossed ?1 lakh crore Equity AUM? Where does Edelweiss stand?
Diversification and tactical sector shifts
Another distinguishing feature is diversification. The fund holds around 250 stocks, while its top five holdings account for only about 12% of assets, down from around 13% six months earlier. This relatively broad portfolio reduces dependence on a handful of companies compared with more concentrated small-cap funds.
The fund also adjusted sector allocations over the past six months. Exposure to consumer durables increased from 4.4% to 5.9%, while agricultural food and related businesses rose from 2.8% to 3.6%. At the same time, allocations to pharmaceuticals and biotechnology, industrial products and finance were reduced, reflecting tactical positioning based on evolving market conditions.
Among the category’s larger funds
With assets under management of about ?27,219 crore as of May 2026, Bandhan Small Cap Fund is among the larger schemes in the category. While size alone does not guarantee future returns, its combination of strong long-term performance, benchmark-beating SIP returns, active portfolio management and broad diversification helps explain why it continues to remain a preferred choice for many investors seeking exposure to India’s small-cap segment.
MUST READ: Should investors shift from aggressive hybrid funds to balanced hybrid funds now? Sankaran Naren explains why
Disclaimer: Business Today provides market and personal news for informational purposes only and should not be construed as investment advice. All mutual fund investments are subject to market risks. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.