DSP BlackRock Micro Cap Fund gave investors an 82% return in the past year, topping nearly 300 Asian small-cap schemes. Managed by Vinit Sambre for over three years, the fund beat the BSE Small-Cap Index's 58% rise since August 2009. It also outperformed the Sensex, which gained 20%, and the BSE 500 Index, which rose 27% in the same period. Six other small-cap funds, including Sundaram BNP Paribas Select Small Cap and HSBC Small Cap, returned between 44% and 57% over 12 months. These funds manage assets ranging from ₹46 crore to ₹954 crore. Value Research praised DSP's fund as an "impressive product in the entire small-cap universe" for holding credible companies with high return on equity and strong industry leadership. CEO Dhirendra Kumar noted that closed-ended funds survived market dips better due to no redemption pressures. DSP's fund became open-ended in June and holds about 10% of its ₹311-crore corpus in cash for redemptions and new opportunities. India has 10 small-cap funds managing around ₹3,450 crore, roughly 2% of total equity assets under management. Experts say small caps surged as many large-cap stocks became expensive. Stocks like Symphony and VIP Industries led gains, rising by 830% and 548% respectively in 12 months. In comparison, Tata Motors and TCS gained 135% and 61%. Deven Choksey, CEO of KR Choksey Shares & Securities, said many small caps were undervalued with low prices and high dividend yields, making them attractive. Despite strong returns, experts advise investors to keep only 10-15% of equity investments in small-cap funds due to their volatility. Dhirendra Kumar warns, "Investors should have a strong stomach and the ability to withstand substantial declines in such funds."