Small-Cap Funds: High Risk, High Reward? Top Funds to Watch in January 2026

• Small-cap funds faced negative returns in 2025 but saw renewed investor interest in November, despite high valuations.
• These funds invest primarily in companies ranked below 250 in market size, with at least 65% allocation to small-cap stocks.
• While highly volatile and risky, small-cap funds offer potential for significant long-term returns, averaging 19% over 10 years.
• They are best suited for aggressive, patient investors with high risk tolerance, willing to stay invested for many years.
• Key funds to watch for January 2026 include Axis Small Cap Fund, SBI Small Cap Fund, Kotak Small Cap Fund, and Nippon India Small Cap Fund.

Why It Matters: Small-cap funds offer high returns with high risk; choose carefully for long-term wealth creation.