Groww Mutual Fund has unveiled a new investment avenue for investors seeking exposure to the dynamic small-cap segment of the Indian stock market. The asset manager has launched the Groww Small Cap Fund, an open-ended equity scheme that will primarily invest in small-cap companies.
NFO Dates and Key Investment Details
The New Fund Offer (NFO) for the Groww Small Cap Fund is open for subscription from January 8, 2026, and will close on January 22, 2026. This provides a limited window for investors to enter the scheme at its initial Net Asset Value (NAV). The fund is expected to reopen for continuous purchases and redemptions on or before February 6, 2026.
The scheme has been designed to be accessible to a wide range of investors with a minimum application amount of just ₹500. Subsequent investments can be made in multiples of just one rupee. However, investors should note that an exit load of 1% will be applicable if units are redeemed within one year from the date of allotment. There will be no exit load after the first year.
Investment Strategy and Fund Management
The primary objective of the Groww Small Cap Fund is to achieve long-term capital appreciation by building a portfolio concentrated in equity and equity-related instruments of small-cap companies. The fund will adhere to the Association of Mutual Funds in India (AMFI) classification, investing in companies that are ranked 251st and below by full market capitalization.
The scheme will be benchmarked against the Nifty Smallcap 250 Total Return Index (TRI). The fund will be helmed by Anupam Tiwari, the Head of Equity at Groww Asset Management. According to the fund house, the investment approach will be bottom-up, focusing intently on company-specific fundamentals, growth potential, and valuation, rather than making top-down macro or thematic bets.
Understanding the Small-Cap Opportunity and Risks
The small-cap segment in India is often viewed as a hunting ground for high growth, as smaller companies have the potential to expand rapidly from a smaller base. These stocks offer exposure to a diverse array of businesses across niche manufacturing, domestic services, and emerging sectors that are typically under-represented in large-cap indices.
Recent structural shifts in the Indian economy, including increased infrastructure spending, deeper capital markets, and the proliferation of digital platforms, have created a more conducive environment for many small-cap firms to scale up and formalize their operations.
However, this potential comes with significant risks. Small-cap stocks are historically associated with higher volatility and sharper price swings compared to their large-cap counterparts. The segment also suffers from uneven analyst coverage, leading to information gaps that can result in wider variations in stock performance. This makes skilled stock selection and a long investment horizon critical.
Market experts consistently advise that small-cap funds are suitable only for investors with a high risk tolerance and a long-term investment perspective of at least 7-10 years. Investors should be prepared for periods of meaningful short-term volatility and deeper drawdowns during market corrections. It is crucial to assess one's financial goals, consider how this investment fits into the overall asset allocation, and consult with a financial advisor before investing.
