Looking for small-cap funds with solid dividend yields? Check this out

The performance of small-cap funds has consistently surpassed that of large-cap funds. We will identify the top small-cap funds with higher dividend yields in this post.

Since June 2022, the Nifty Small-Cap 100 index has had a significant gain. Following an almost 34 per cent drop, the Nifty Small-Cap 100 index has risen roughly 27 per cent in the previous three months.

According to studies conducted across the world, recovering takes twice as long as falling. In the case of the Nifty Small-Cap 100 index, the decline began in January 2022 and lasted until June 2022. This signifies that the index dropped for six months.

Based on the premise that recovery would take twice as long, the index still has a lot of room to rise. The trend reversal has also been observed in the Nifty Small-Cap 100 index. Despite the presence of dark clouds, a favourable risk-reward ratio makes small-cap space appealing.

According to the aforementioned data, small-cap funds have outperformed the majority of the categories during the past three months (excluding sectoral and thematic funds). Small-cap funds earned a 3-month median return of 14.3 per cent, while large-cap funds generated a 3-month median return of 9.73 per cent.

Nevertheless, who doesn't want a steady stream of income? There are two methods to generate a regular income from mutual funds: dividends and a systematic withdrawal plan (SWP).

Despite the fact that they serve the same objective, they function differently. Dividend income cannot be considered fixed since the fund decides whether or not to pay the dividend. In the case of SWP, the income is set, and the required units are redeemed regardless of the fund's performance.

In this post, we have compiled a list of the best small-cap funds with the best dividend yields over the last one year.