Groww Mutual Fund launches small cap fund; NFO opens today
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Groww Mutual Fund on Wednesday announced the launch of the Groww Small Cap Fund, an open-ended equity scheme that will primarily invest in small-cap stocks. The new fund offer (NFO) will open for subscription on Wednesday and close on January 22, 2026.
What is the scheme?
The scheme aims to generate long-term capital appreciation by investing in high-quality and scalable small-cap companies. It will follow a disciplined, bottom-up stock selection approach guided by Groww Mutual Fund’s QGaRP framework, which focuses on Quality and Growth at a Reasonable Price.
According to the fund house, India’s economy is undergoing a broad-based transformation, with strengthening physical, financial, and technological infrastructure expanding opportunities for businesses across market capitalisations. Increased infrastructure spending, deeper capital markets, wider access to formal credit, and the rapid adoption of population-scale digital platforms are helping reduce structural disadvantages traditionally faced by smaller companies.
These developments, Groww Mutual Fund said, have improved the ability of small businesses to scale operations, tap new markets, and compete more effectively with larger peers. As a result, the small-cap segment is increasingly viewed as an attractive hunting ground for long-term investors willing to navigate higher volatility.
January 2026
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Small-cap stocks have showed the potential to deliver higher long-term returns
Historically, small-cap stocks have demonstrated the potential to deliver higher long-term returns compared to large caps, supported by a smaller base and greater headroom for growth. The segment also offers exposure to a broad and diverse set of niche, specialised, and emerging sectors that are either underrepresented or absent in large- and mid-cap indices.
This diversity includes companies benefiting from long-term structural trends as well as businesses where growth is driven more by company-specific execution than by broader macroeconomic cycles. However, despite the breadth of opportunities, a significant portion of the small-cap universe continues to have limited analyst coverage, creating information gaps.
Groww Mutual Fund said that such gaps can offer opportunities for disciplined, research-driven investors to identify quality businesses early in their growth journey. Additionally, following a period of relative underperformance, valuations in parts of the small-cap segment have moderated, even as fundamentals for several companies have continued to improve.
The combination of improving fundamentals and more reasonable valuations, the fund house said, has expanded the opportunity set for bottom-up stock selection, making the timing favourable for a focused small-cap investment strategy.