Groww Mutual Fund has launched the Groww Small Cap Fund, an open-ended equity scheme that will invest predominantly in small-cap stocks. The new fund offer (NFO) opened on 8 January 2026 and will close on 22 January 2026.
The scheme aims to generate long-term capital appreciation by investing primarily in equity and equity-related instruments of small-cap companies, defined as those ranked 251st and below by full market capitalisation, in line with AMFI classifications. The fund will be benchmarked against the Nifty Smallcap 250 Total Return Index (TRI) and will be managed by Anupam Tiwari, head of equity at Groww Asset Management.
The minimum investment amount is ₹500, with additional investments allowed in multiples of Re.1 thereafter. An exit load of 1% will apply if units are redeemed within one year from the date of allotment, with no exit load thereafter. The scheme is expected to reopen for continuous purchase and redemption on or before 6 February 2026.
India’s small-cap segment has historically been associated with higher long-term growth potential, reflecting the ability of smaller companies to expand from a lower base. At the same time, the segment has been marked by sharper volatility and wider swings in performance compared with large-cap stocks. Recent market phases have underscored the importance of stock selection and holding periods in determining outcomes within the category.
Small-cap stocks also provide exposure to a broad and diverse set of businesses across niche manufacturing, domestic services, and emerging industries that are under-represented in larger indices. Uneven analyst and institutional coverage, however, has contributed to information gaps and wider variations in performance, making stock selection a key driver of returns in the segment.
Structural changes in the Indian economy have further altered the opportunity set for smaller companies. Increased infrastructure spending, deeper capital markets, improved access to formal credit, and the expansion of population-scale digital platforms have reduced several historical constraints, allowing more small-cap firms to scale operations, formalise balance sheets, and access wider markets.
According to the fund house, the Groww Small Cap Fund will follow a bottom-up investment approach, focusing on company fundamentals, growth potential, and valuation considerations, while avoiding macro-driven or thematic positioning.
Market participants continue to emphasise that small-cap funds are best suited for investors with a long-term investment horizon and a higher tolerance for volatility. Returns can vary meaningfully over shorter periods, and drawdowns can be sharper during market corrections. Investors should assess suitability carefully, consider overall portfolio allocation, and consult a financial advisor before investing.
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