As investors seek growth opportunities in December 2025, select small cap mutual funds are drawing attention based on recent performance metrics, risk reward profiles, and fund house expertise. Small cap funds invest primarily in companies with relatively lower market capitalisation, offering potential for higher returns alongside higher volatility. 

The mutual fund new fund offer pipeline remains subdued this week, with only one passive fund scheduled to open for subscription. The limited activity reflects a cautious approach by asset management companies amid ongoing market volatility and regulatory scrutiny. Passive funds, which track underlying indices, continue to attract investor interest due to lower costs and transparent portfolio construction.