A ₹1 lakh investment in JM Small Cap Fund would have risen to about ₹1.07 lakh in just one month, significantly outperforming most mid-cap peers.
Equity mutual funds continued their upward momentum in May 2026, with both mid-cap and small-cap categories delivering positive returns. However, mid-cap funds held a slight edge over their small-cap counterparts at the benchmark level, while small-cap funds produced some of the strongest individual fund performances during the month.
According to FinAlpha's monthly snapshot covering the period from April 30 to May 30, 2026, every mid-cap fund tracked ended May in positive territory, while nearly all small-cap funds also generated gains. The performance reflects sustained investor interest in broader market segments beyond large-cap stocks.
Mid-Cap Funds outperform
The Nifty Midcap 150 TRI rose 2.63% during May, comfortably outperforming the Nifty Smallcap 250 TRI, which gained 1.60%.
Mid-cap funds benefited from continued earnings resilience and stronger institutional participation. The category's top performer was JM Midcap Fund, which generated a monthly return of 5.43%.
Top Mid-Cap Funds in May 2026
Fund Monthly Return
JM Midcap Fund 5.43%
HSBC Midcap Fund 4.95%
TrustMF Mid Cap Fund 4.38%
Helios Mid Cap Fund 4.04%
WhiteOak Capital Mid Cap Fund 3.83%
Other notable performers included Quant Mid Cap Fund (3.38%), Samco Mid Cap Fund (3.30%) and Union Midcap Fund (3.04%).
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Small-cap funds
Although the small-cap benchmark lagged the mid-cap index, the category produced the highest individual fund return during the month.
JM Small Cap Fund emerged as the best-performing fund across both categories, delivering an impressive 7.09% return in May.
Top Small-Cap Funds in May 2026
Fund Monthly Return
JM Small Cap Fund 7.09%
TrustMF Small Cap Fund 5.76%
Bank of India Small Cap Fund 5.32%
Quantum Small Cap Fund 5.20%
Helios Small Cap Fund 4.67%
Quant Small Cap Fund (4.44%) and LIC MF Small Cap Fund (4.13%) also posted strong gains.
A ₹1 lakh investment in JM Small Cap Fund would have risen to about ₹1.07 lakh in just one month, significantly outperforming most mid-cap peers.
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Long-term returns
While monthly returns often capture investor attention, long-term performance remains a more important measure for mutual fund investors.
Among mid-cap funds, Union Midcap Fund reported the highest since-inception CAGR at 30.78%, followed by HSBC Midcap Fund at 25.18% and Helios Mid Cap Fund at 24.87%.
In the small-cap category, Bandhan Small Cap Fund stood out with a 30.51% since-inception CAGR, while Bank of India Small Cap Fund delivered 26.67% and Edelweiss Small Cap Fund generated 24.66%.
These numbers highlight the wealth-creation potential of mid-cap and small-cap investing over longer periods despite short-term volatility.
If Rs 1 lakh was invested in...
A ₹1 lakh investment in the top five mid-cap funds would have grown to ₹1.04-1.05 lakh in May 2026, led by JM Midcap Fund at ₹1,05,430. Even the bottom five mid-cap funds delivered positive returns, with investment values ranging from ₹1,00,560 to ₹1,01,160.
In the small-cap category, the top five funds turned ₹1 lakh into ₹1.05-1.07 lakh, with JM Small Cap Fund leading at ₹1,07,090. The bottom five small-cap funds were more varied, ranging from ₹99,780 to ₹1,00,830, highlighting the higher return potential—and volatility — associated with small-cap investing.
Which category performed better?
The answer depends on the metric being used.
From a benchmark perspective, mid-cap funds performed better, with the Nifty Midcap 150 TRI rising 2.63% compared with the Nifty Smallcap 250 TRI's 1.60% gain.
However, from a fund-level perspective, small-cap funds produced stronger winners, with JM Small Cap Fund's 7.09% return comfortably surpassing JM Midcap Fund's 5.43% gain.
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What investors should know
The May 2026 data reinforces the differing characteristics of the two categories. Mid-cap funds generally offered broader and more consistent gains across the category, while small-cap funds provided higher upside potential through standout performers.
For long-term investors, both categories remain important components of a diversified equity portfolio. However, small-cap funds typically carry higher volatility and risk, making them more suitable for investors with longer investment horizons and greater risk tolerance. Mid-cap funds, meanwhile, continue to offer a balance between growth potential and relative stability, making them attractive for investors seeking long-term wealth creation without taking on the full risk associated with small-cap investing.
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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.
Published on: Jun 3, 2026 7:02 PM IST
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