Title: Does small cap fund out-perform their counterparts? – An empirical study in Indian mutual fund industry

Authors: Senthil Arasu Balasubramanian; Rajesh Jeyaprakash; Jeevananthan Manickavasagam

Addresses: National Institute of Technology, Tirchirappalli 620008, India ' National Institute of Technology, Tirchirappalli 620008, India ' Finance and Accounting, International Management Institute Kolkata, Kolkata – 700038, India

Abstract: The paper aims to understand the dynamics of small cap fund performance in comparison with midcap and multicap funds in the mutual fund business. The findings from the study provide strong guidelines for investors in selecting mutual funds based on the growth strategies which will add wealth to the investors. Adopted various return and risk frameworks to identify the performance of the funds in the business. Tools adopted are probabilistic Sharpe ratio, Carhart four-factor models, and MI index. The result suggests that small cap fund performance edge over other counterparts in the study for the period of 2016 to 2022. Small-cap fund adds value to the investor in the mutual fund business. Small-cap funds adopted value and momentum strategies to build wealth for the retail investor. The present study provides insight to investors while selecting funds based on market capitalisation in the mutual fund business.

Keywords: small cap funds; mutual fund industry; investor decision; market capitalisation; Carhart performance model.

DOI: 10.1504/IJICBM.2025.146684

International Journal of Indian Culture and Business Management, 2025 Vol.35 No.2, pp.147 - 167

Received: 02 Aug 2023
Accepted: 12 Aug 2023
Published online: 13 Jun 2025 *

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