India’s smallcaps where the next big names emerge

Invesco India Smallcap Fund delivered a 3-year CAGR of 21.88%

Domestic consumption, steady government capital expenditure and sustained retail investor participation have continued to anchor Indian equity markets, even as global developments, including geopolitical tensions and shifting trade dynamics, have periodically weighed on sentiment. Corporate earnings have held up reasonably well and inflation has stayed in check, giving policymakers room to support growth.

The Invesco India Smallcap Fund is an open-ended equity scheme predominantly investing in small-cap stocks, following a bottom-up approach focused on identifying businesses with sustainable models, growth potential and attractive risk-reward characteristics. As of 31st July 2026, 65.49% of the portfolio was invested in small-cap stocks, with 14.96% in mid-caps and 13.69% in large-caps.

Since its launch on 30 October 2018, the fund has delivered strong performance across market cycles. As of 31 July 2026, it delivered a 3-year CAGR of 21.88% versus 15.10% for the BSE 250 Smallcap TRI. Over 5 years, the fund delivered 18.35% versus 14.55% for the benchmark, while since inception it generated 22.12% compared with 18.09%.

The fund has also delivered strong SIP returns, with XIRRs of 25.62% (3 years), 20.35% (5 years), 24.20% (7 years) and 23.81% (Since Inception), reflecting its consistent wealth creation potential.

The fund is managed by Taher Badshah and Aditya Khemani. Taher Badshah brings 31 years of industry experience and has managed the fund since inception, while Aditya Khemani brings 20 years of experience and has managed the fund since November 2023. Together, they follow a disciplined approach to identifying long-term opportunities within India’s small-cap universe.

The smallcap segment enters this phase on firmer footing than a year ago. Earnings growth, which had slowed through much of 2025, has begun to recover, and the pool of small, fast-scaling businesses has continued to widen as more companies cross meaningful market-capitalisation thresholds. Foreign institutional ownership of Indian equities remains well below its historical average, leaving room for allocations to improve as sentiment turns. At the same time, the segment’s breadth and dispersion mean that disciplined, bottom-up stock selection remains essential to separate businesses with sustainable growth prospects from those driven primarily by market momentum.