Multi-Cap Mutual Funds

  • High Returns with Calculated Risk

  • Investments in multiple funds like debt funds, large-cap, mid-cap companies

  • Ideal for Investments more than 5 years

  • Handpicked Funds based on High returns and Past Performance

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Best Multi-Cap Funds in India

Multi-Cap Fund Name 3- Year Returns 5- year Returns
Motilal Oswal Multicap15.76%%–%
Aditya Birla Sun Life Equity Fund16.51%18.5%
SBI Magnum Multicap Fund14.54%18.49%
Mirae Asset Emerging Bluechip Fund18.59%26.72%
L&T India Value Fund12.11%21.19%
ICICI Prudential Value Discovery Fund10.27%17.15%
DSP Blackrock Opportunities Fund18.22%20.37%
Tata Equity PE Fund18.47%22.86%
Franklin India Opportunities Fund13.64%18.65%

What are Multi-Cap Funds?

It is safe to say that investing in mutual funds is not a very easy task. A multitude of factors needs to be considered before choosing the right funds and categories to invest in. One of the major dilemmas that the investors are presented with is the type of funds to invest in i.e large-cap which assure stability and safety to your portfolio, small-cap, and mid-cap which provide exceptionally high-returns. Sectoral Funds can also provide additional returns if a particular sector of the economy performs exceptionally well.

One of the fund categories that attempt to take the best of all with multitude and flexibility is multi-cap mutual funds. Multi-Cap mutual funds are basically diversified equity funds that invest in stocks of companies across various market caps in different proportions.

Multi-Cap funds come along with a reduced risk factor in comparison to pure small-cap and mid-cap funds. These funds have gained a lot of popularity among investors who are less aggressive towards returns. Generally, the fund managers of these particular funds tend to invest in stocks across a wide variety.

In addition to careful considerations while picking a stock, the fund managers also keep switching the holdings in the fund between the big-cap, small-cap, and mid-cap as and when they deem it fit to do so.

Since multi-cap funds are invested in a wide range of multi-cap firms, they might deliver astounding returns during a bull run (a market in which share prices are rising, encouraging investors to buy) and could even outperform some of the purely large-cap/mid-cap firms. This generally happens because, during a bull market, the stocks in the funds are reaching their potential and diversifying their growth avenues.

A multi-cap fund is able to deliver consistent growth, as well as, great value to its investors owing to its huge and diverse investment universe. Multi-cap funds have been touted to be among one of the best wealth-creators for the long-haul investment horizon.

Performance Returns of Multi-Cap Funds

Multi-cap funds have consistently shown that they are a source of excellent performance over the past few years. Many of these multi-cap funds have shown better performance than the average market returns by quite some margin.

In order to measure the performance and see the fund returns, these funds are compared to an index called the benchmark index. Benchmark is nothing but a broad market index which basically helps to compare mutual funds, Here we give you an is a table which compares the performance of equity mutual funds inclusive of multi-cap mutual funds against the BSE Sensex Index:

Equity Schemes 1-Year Return 3-Year Returns 5-Year Returns 7-Year Returns
Mid and Small Cap47.16%20.33%20%13.52%

Should I Invest in Multi-Cap Mutual Funds?

The multi-cap mutual funds are well-known for maintaining an extensive and diverse portfolio. These portfolios essentially consist of stocks across various market caps and sectors of the economy. The diversified mutual funds present investors with a great opportunity to be exposed to a broader equity segment by nominal Systematic Investment Plans.

Investors wanting to avoid the troubles of stock-picking and even deciding which market cap mutual fund to go for, should consider investing in multi-cap as a starter fund. You can switch to one of the pure market cap funds as soon as you get acquainted with the market. Novice/Beginner Investors with the aim of risk minimization should consider an investment in these funds.

Multi-cap funds are great at balancing risk and volatility and this is achieved by making a varying proportion blend of small-cap and mid-cap inside a single portfolio. However, with the provisions of exceptional returns with high risk, investors would also need the stability of big-cap/ large-cap funds. During times of market rally, small-cap funds perform well and during a dip or a slump, the large-cap funds tend to balance out the lack of returns. Basically, individuals with moderate risk tolerance, as well as, novice investors might find multi-cap funds to be highly suitable. Therefore, conducting an assessment of your financial goals and whether or not multi-cap funds are in alignment with those goals needs to be done to ascertain whether or not you should invest in these funds.

Things to Know while Investing

When you’re about to invest in multi-cap mutual funds there are a number of factors you need to consider and ensure that you’re comfortable investing your hard-earned money towards such policies.

Fund Returns

Obviously, how much return a particular mutual fund investment will yield for you is an important and pivotal factor in deciding and fixating on a particular scheme. You can take a glance at the performance of the fund with regards to the returns of the fund for the past few years say 5-7 years in order to make a comprehensive assessment of the performance of the fund. It is advisable to select the funds that consistently beat their benchmark indices (comparison index).

Fund Objectives

The aim of most multi-cap funds is essential to accumulate wealth by investing in a diverse portfolio offering a profitable combination of high risk, growth, as well as, value. In general, the investing style of these funds is growth investing or value investing. Fund managers also make use of financial ratios like Price to Earnings Ratio (P/E Ratios), EPS, and Enterprise Value, in order to ensure that the portfolios consist of only the best of stocks.


Fluctuations in the value of the fund occur due to a fall or rise in the index value owing to market risks. These funds usually exhibit higher volatility in comparison to the big-cap/large-cap but lower when compared with small-cap and mid-cap. A skilled fund manager will keep varying and modifying the asset allocation in order to take advantage of market movements.

Expense Ratio

In order to manage your money, mutual funds will charge an expense ratio. The Securities Exchange Board (SEBI) has set out the limit for the expense ratio to be not more than 1.05%. The multi-cap mutual funds have an active management style in order to extract and accumulate exceptional gains owing to market opportunities. In multi-cap funds, the expense ratios might be slightly higher in comparison to purely large cap/ small caps. However, the high costs/ expense ratios will be more than made up for by the high returns of the multi-cap funds.

Investment Horizon

Multi-Cap funds have been adjudged to be best suited to individuals with a medium to long-term investment horizon in mind. The equity schemes are essentially a very diverse fund coming up with a minimum lock-in period of 3 years. In the short run like any other fund, multi-cap funds experience a lot of fluctuations which tend to iron out in the long run. If an investor chooses a multi-cap fund for an investment they should be comfortable sticking with their investment for a time period specified as per the scheme.

Financial Goals

Multi-Cap Funds have been named among some of the most ideal wealth creators in comparison to pure market cap funds like big-cap funds. The dynamic and active investment strategy of these funds could potentially facilitate greater wealth generation in order to achieve long-term financial goals like children’s education/retirement planning/ children’s wedding among others. The multi-cap funds have been touted to be a haven for high to moderate risk funds with high returns. Stories of many individuals retiring early due to smart investments made by them come to mind when thinking of multi-cap funds.

Fund Manager and History

The Multi-cap mutual fund is an actively managed mutual fund scheme, as the fund manager needs to actively change the asset allocation owing to the situation of the market. It, therefore, becomes of paramount importance that the fund is being managed by a fund manager who has a proven track record of high-performing funds (generally higher than benchmark indices). In addition to this, you need to look at the reputation of the asset management company. They should have either a long history of efficient fund management for many individuals or else they should have a consistent track record for at least 5 years or more. This basically ensures that the fund, the management institution, and the fund managers have performed reasonably well under all market cycles.

Financial Ratios

Multi-Cap Mutual Funds come with a high to moderate risk portfolio and hence the financial ratios for risk-return become pivotal for these funds. The most important of these is the Sharpe ratio. Sharpe Ratio is important in order to assess the performance of a particular fund. The Sharpe ratio is essentially an indicator of risk-adjusted returns of a particular fund. Simply put, this ratio indicates excess returns given by the fund over the returns given if the fund was a risk-free instrument. Higher the Sharpe ratio, the better the risk-adjusted returns of the fund, and hence better the performance of the fund.