A small cap ETF is an exchange-traded fund that copies a small-company index, such as the Nifty Smallcap 250, and trades on the stock exchange like a share. On 29 September 2026, NSE's ETF list had 11 ETFs tracking a small-cap index: seven plain Nifty Smallcap 250 ETFs, one Nifty Smallcap 100 ETF and three factor or sector variants. There was no ETF on a BSE small-cap index and no Nifty Smallcap 50 ETF.
Because ETFs on the same index hold the same stocks, their returns are almost identical. What separates them is cost, how closely they track the index, how big they are and how easily you can buy and sell them. This guide compares all of them on those points. It explains the options; it does not recommend any of them.
Which Small-Cap Indices Do ETFs Track?
NSE Indices runs three main small-cap indices. All are weighted by free-float market value (the shares actually available to trade) and reviewed twice a year, in March and September, using six months of data.
| Index | Stocks | How stocks are chosen | Base date | ETFs available? |
|---|---|---|---|---|
| Nifty Smallcap 250 | 250 | Companies in the Nifty 500 that are not in the Nifty 100 or Nifty Midcap 150, i.e. roughly ranks 251–500 | 1 April 2005 (launched 1 April 2016) | Yes, seven plain ETFs |
| Nifty Smallcap 100 | 100 | All of the Nifty Smallcap 50, plus stocks picked by daily trading value from the 150 largest (by full market value) in the Smallcap 250 | 1 January 2004 | Yes, one ETF |
| Nifty Smallcap 50 | 50 | Top 50 by free-float market value from the 150 largest and most traded Smallcap 250 stocks | 1 April 2005 | No ETF; index funds only |
Source: NSE Indices, Nifty Smallcap 250 factsheet (31 August 2026) and NIFTY equity indices methodology document (September 2026).
In short, the Smallcap 250 is the whole small-cap segment of the Nifty 500. The Smallcap 100 is a narrower slice of its larger and more traded names.
How small is "small"?
Using AMFI's average market capitalisation list for January–June 2026, Nifty Smallcap 250 companies ranged from roughly ₹5,800 crore to ₹94,000 crore in average total market value. The median was about ₹16,300 crore. A few constituents, such as IDBI Bank, sit above AMFI's small-cap cut-off (about ₹33,400 crore) because NSE ranks on free-float value, and a low free float keeps them in the small-cap index.
No single stock dominates. On 31 August 2026 the largest weight was Sona BLW Precision Forgings at 1.65%. The biggest sectors were financial services (22.2%), capital goods (13.5%) and healthcare (13.2%).
How the indices have done
| Index (total return) | 1 year | 3 years (a year) | 5 years (a year) | 10 years (a year) |
|---|---|---|---|---|
| Nifty Smallcap 250 TRI | 7.12% | 15.32% | 15.11% | 14.63% |
| Nifty Smallcap 100 TRI | 10.38% | 17.23% | 13.57% | 13.10% |
| Nifty Smallcap 50 TRI | 14.77% | 20.59% | 13.85% | 12.00% |
| Nifty 50 TRI (reference) | -6.02% | 6.80% | 6.58% | 11.45% |
Source: NSE Indices index returns table, total return index, to 25 September 2026. Past returns change a lot with the end date: to 31 August 2026, the Smallcap 250 TRI's 1-year return was 11.95%.
The order flips depending on the period. The narrower indices did better over three years and worse over five and ten. There is no reason to expect any one of them to lead in future.
Every Small-Cap ETF Compared
These are the eight ETFs that track a plain small-cap index, sorted by size.
| ETF | NSE symbol | Index | Launched | Expense ratio | AUM (₹ Cr) | Tracking error | Avg daily NSE trading (₹ Cr) |
|---|---|---|---|---|---|---|---|
| HDFC Nifty Smallcap 250 ETF | HDFCSML250 | Smallcap 250 | Feb 2023 | 0.26% | 2,691 | 0.08% | 32.76 |
| Motilal Oswal Nifty Smallcap 250 ETF | MOSMALL250 | Smallcap 250 | Mar 2024 | 0.50% | 253 | 0.19% | 3.10 |
| Zerodha Nifty Smallcap 100 ETF | SML100CASE | Smallcap 100 | Sep 2025 | 0.23% | 101 | 0.10% | 1.95 |
| Mirae Asset Nifty Smallcap 250 ETF | SMALL250 | Smallcap 250 | Nov 2025 | 0.29% | 84 | 0.11% | 0.74 |
| Groww Nifty Smallcap 250 ETF | GROWWSC250 | Smallcap 250 | Oct 2025 | 0.38% | 17 | 0.14% | 0.17 |
| ICICI Prudential Nifty Smallcap 250 ETF | SMALLIETF | Smallcap 250 | Jun 2026 | 0.91% | 9 | 0.22% | 0.09 |
| SBI Nifty Smallcap 250 ETF | SBISMLETF | Smallcap 250 | May 2026 | 0.69% | 8 | not yet published | 0.09 |
| DSP Nifty Smallcap 250 ETF | SMALLADD | Smallcap 250 | Dec 2025 | 0.25% | 8 | 0.32% | 0.14 |
Expense ratio: AMFI total expense ratio disclosure, September 2026 (latest daily figure, 22–28 September 2026). AUM: month-end 31 August 2026. Tracking error: AMFI disclosure, 1-year annualised, 25 September 2026. Trading: average daily traded value on NSE over 20 sessions, 31 August to 28 September 2026 (NSE bhavcopy). Launch: first NAV date in AMFI NAV history.
What the table shows
- Only one is really liquid. HDFCSML250 trades about ₹33 crore a day on NSE. The next plain small-cap ETF trades about ₹3 crore, and four trade under ₹0.2 crore a day.
- Cheapest is not always best. DSP's ETF (0.25%) is among the cheapest but had the highest tracking error (0.32%) and trades very little. Zerodha's Smallcap 100 ETF is the cheapest at 0.23%, but it tracks a different index.
- Most are new. Six of the eight were launched in the last 13 months. Only HDFCSML250 has a 3-year record.
- Price can drift from NAV. On 28 September 2026, the NSE closing price was above the fund's NAV for most of them: HDFCSML250 by 0.18%, MOSMALL250 by 0.21%, SBISMLETF by 0.56%. Zerodha's SML100CASE closed 0.17% below. These are single-day readings, but they show the gap is real.
Factor and sector ETFs that hold small caps
Three more ETFs hold small caps but filter them by rules, so they will behave differently from the plain index:
- Mirae Asset Nifty Smallcap 250 Momentum Quality 100 ETF (SMALLCAP): 0.76% expense ratio, ₹989 crore AUM, about ₹9 crore a day of trading.
- Mirae Asset Nifty MidSmallcap400 Momentum Quality 100 ETF (MIDSMALL): 0.69%, ₹494 crore, mixes mid and small caps.
- Groww Nifty Smallcap 250 Momentum Quality 100 ETF (SMALLGROWW): 1.52%, ₹7 crore, launched June 2026.
For how momentum and quality filters work, see smart beta and factor ETFs in India.
HDFC Nifty Smallcap 250 ETF: Profile
This is the most searched small-cap ETF in India and the largest by a wide margin. Here are its numbers. They describe the fund; they are not a recommendation.
| Item | Value | Source and date |
|---|---|---|
| NSE symbol | HDFCSML250 | NSE |
| Index | Nifty Smallcap 250 (total return) | NSE ETF list, 29 Sep 2026 |
| First NAV | 15 February 2023 | AMFI NAV history |
| Total expense ratio | 0.26% | AMFI, Sep 2026 |
| AUM | ₹2,691 crore | 31 Aug 2026 |
| Tracking error (1 year) | 0.08% | AMFI, 25 Sep 2026 |
| Average daily NSE trading | about ₹33 crore | NSE bhavcopy, 31 Aug–28 Sep 2026 |
| NSE closing price | ₹180.50 per unit (lot size 1) | NSE bhavcopy, 28 Sep 2026 |
| NAV return, 1 year | 7.3% | AMFI NAV, to 28 Sep 2026 |
| NAV return, 3 years (a year) | 13.9% | AMFI NAV, to 28 Sep 2026 |
A few points stand out. Its tracking error is the lowest of the small-cap ETFs that have one. It is the only small-cap ETF with trading volumes that support larger orders without moving the price much. And you can buy a single unit, so the minimum is about one unit's price plus charges.
HDFC also runs a separate HDFC Nifty Smallcap 250 Index Fund, which many people search for alongside the ETF. It holds the same index but is a normal mutual fund: you buy and sell at NAV from HDFC or a platform, with no demat account. Its Direct plan had a 0.33% expense ratio, ₹775 crore AUM and 0.08% tracking error (AMFI, September 2026; AUM at 31 August 2026).
Small-Cap ETF vs Index Fund vs Active Fund
All three put your money in small companies. They differ in how you buy, what you pay and who picks the stocks.
| Point | Small-cap ETF | Small-cap index fund | Active small-cap fund |
|---|---|---|---|
| Expense ratio (Sep 2026) | 0.23%–0.91%; largest ETF 0.26% | 0.25%–0.58% (Direct); largest fund 0.41% | 0.51%–0.93% for the seven funds in our comparison (Direct) |
| Tracking error | 0.08%–0.32% | 0.05%–0.16% | Not applicable; aims to beat the index |
| How you buy | On NSE/BSE through a broker, at market price | From the AMC or a platform, at end-of-day NAV | Same as index fund |
| Demat account | Needed | Not needed | Not needed |
| SIP | Not a true SIP; some brokers let you schedule recurring buys | Yes, automatic | Yes, though some large funds cap new money |
| Extra trading costs | Bid-ask spread, premium or discount to NAV, brokerage, demat charges | None at purchase | None at purchase |
| Liquidity risk for you | Depends on the ETF's trading volume | AMC redeems at NAV | AMC redeems at NAV |
ETF and index fund figures: AMFI expense ratio (September 2026) and tracking error (25 September 2026) for the funds listed in this guide. Active fund range: Direct-plan expense ratios of the seven funds in our small cap mutual fund comparison, 27–28 September 2026.
Here are the largest Nifty Smallcap 250 index funds for comparison (Direct plans):
| Index fund | Expense ratio | AUM (₹ Cr) | Tracking error |
|---|---|---|---|
| Nippon India Nifty Smallcap 250 Index Fund | 0.41% | 3,518 | 0.06% |
| SBI Nifty Smallcap 250 Index Fund | 0.44% | 1,788 | 0.06% |
| Motilal Oswal Nifty Smallcap 250 Index Fund | 0.39% | 1,299 | 0.05% |
| ICICI Prudential Nifty Smallcap 250 Index Fund | 0.37% | 789 | 0.07% |
| HDFC Nifty Smallcap 250 Index Fund | 0.33% | 775 | 0.08% |
| Edelweiss Nifty Smallcap 250 Index Fund | 0.25% | 285 | 0.10% |
AMFI Direct-plan total expense ratio (September 2026 file, 22–28 September), AMFI tracking error (25 September 2026), AUM at 31 August 2026.
What the cost gap means in rupees
Illustrative only. On ₹5 lakh held for a year, a 0.26% expense ratio costs about ₹1,300 (₹5,00,000 × 0.26%). At 0.41% it is ₹2,050, and at 0.51%–0.93% it is ₹2,550–₹4,650. On the ETF you also pay a one-off cost each time you buy or sell. For example, buying at a 0.18% premium to NAV adds about ₹900 on ₹5 lakh, before brokerage. Over several years the running cost matters more; for one-off trades the spread and premium can matter more. You can test your own numbers with the ETF vs index fund calculator.
Active funds cost more but try to beat the index. Some have done so over five years and some have not. Our small cap fund comparison shows each fund's record against the Nifty Smallcap 250 TRI.
The Hidden Costs of Small-Cap ETFs
The expense ratio is only part of what an ETF costs you. Four other costs show up when you trade:
- Bid-ask spread. The gap between the best buy and sell price. It is narrow on a heavily traded ETF and can be wide on one that trades a few lakh rupees a day.
- Premium or discount to iNAV. The ETF's market price can sit above or below the live value of its holdings (the indicative NAV, or iNAV). Buying at a premium or selling at a discount costs you directly.
- Brokerage. Charged by your broker on each trade, plus the usual exchange charges and taxes on the trade.
- Demat charges. Annual maintenance and per-sale debit charges on your demat account.
Small-cap ETFs can be more exposed to the first two because their underlying stocks are less liquid than large caps. Using limit orders and checking the iNAV on the AMC or exchange website before you trade helps. For the full comparison of these costs across products, read ETF vs mutual fund vs index fund.
Risks to Understand
Volatility and deep falls
Small caps move more than large caps. Over five years to 31 August 2026, the Nifty Smallcap 250's annualised standard deviation was 18.55%, against 13.81% for the Nifty 50. Its falls have been large:
- January 2018 to March 2020: the Smallcap 250 TRI fell 59.8% from peak to trough.
- 2020 COVID crash: it fell 43.5% between 24 January and 24 March 2020.
- September 2024 to March 2025: it fell 26.0%, against 15.4% for the Nifty 50 TRI.
- January to March 2026: it fell 15.4%, then made a new high on 8 September 2026.
- 2008: a back-tested fall of 75.6%. The index was launched in 2016, so this figure is a reconstruction, not live data.
Computed from NSE Indices daily total return index data to 28 September 2026. Price-index falls were slightly deeper.
A small-cap ETF falls with its index. It has no manager who can move to cash.
Liquidity of the ETF itself
An ETF's units can trade thinly even when its fund is fine. Market makers are meant to keep prices close to NAV, but on ETFs that trade under ₹0.2 crore a day you may face wider spreads or bigger premiums, especially in a sell-off.
Valuations
The Nifty Smallcap 250 traded at a P/E of 33.90 and a P/B of 3.59 on 31 August 2026 (NSE factsheet). That tells you what you are paying for current earnings. It does not tell you what returns will be.
Long flat periods
After the 2018 peak, the index took years to recover. Small caps suit money you can leave for a long time. A SIP calculator can show how monthly investing over a long period might look under different return assumptions.
How Small-Cap ETFs Are Taxed
Small-cap ETFs are equity-oriented funds, so they are taxed like equity:
- Held 12 months or less: short-term capital gain, taxed at 20%.
- Held more than 12 months: long-term capital gain, taxed at 12.5% on total equity gains above ₹1.25 lakh in the year.
For sales from 1 April 2026 (tax year 2026-27), these rates come from the Income-tax Act, 2025: section 196 (old 111A) for short-term gains and section 198 (old 112A) for long-term gains. Sales in FY 2025-26 are taxed at the same rates under the 1961 Act and are reported in returns filed in 2026. Cess, and surcharge where it applies, are added on top. The rules are the same for ETFs and index funds on the same index. For more, see mutual fund tax in India 2026.
How to Compare Small-Cap ETFs
- Choose the index first. Smallcap 250 is the broad segment; Smallcap 100 is a narrower, more traded slice; factor ETFs follow extra rules.
- Check daily trading value. Thin trading means wider spreads and bigger premiums.
- Compare expense ratio and tracking error together. A low fee with high tracking error can cost you more.
- Look at the price against iNAV before each trade, and use limit orders.
- Ask whether you need an ETF at all. If you want automatic SIPs and no demat account, a small-cap index fund does the same job.
- Size it within your plan. Small caps are the most volatile part of an equity portfolio.
Use the ETF vs index fund calculator to compare total costs, and the XIRR calculator to measure what your own purchases have returned. For other equity indices, see equity ETFs beyond the Nifty 50, the screened list in best ETFs in India 2026, or browse all funds on our ETF hub.
This guide compares products using public data. It is not investment advice or a recommendation to buy or sell any ETF or fund. Expense ratios, AUM and trading volumes change; check the latest AMFI and NSE figures before you invest.