New Delhi, Jan. 1 -- India's small-cap mutual fund category went through a sharp reality check in calendar year 2025, emerging as one of the clear underperformers among diversified equity categories. After years of strong gains, valuation excesses corrected meaningfully, triggering steep decline in 2025. The Nifty Smallcap 100 index declined 7% in 2025, reflecting the severity of the correction.

Among small-cap funds, Quantum Small Cap Fund emerged as the category leader, delivering a positive return of 1.81% and standing out as the only fund to end in the green. It was followed by Sundaram Small Cap, HDFC Small Cap, PGIM India Small Cap and ICICI Prudential Smallcap Fund, all of which posted negative returns ranging between -1.56% and -...