Multi Cap Mutual Funds

Multi-cap Mutual Funds invest in companies with a variety of market capitalisation. Investors planning to get a stable return, comprising balanced risk and long-term growth, can always opt for multi-cap mutual funds as the money is invested in established as well as growing companies.

Disciplined diversification of portfolio

Investment in key profitable sectors

Ideal investment option for new investors

Average annual return of 18% to 24%

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List of Best Multi Cap Mutual Funds Based on Last 3-Year Returns

Large Cap

3 Yr Returns

20% - 22%

Flexi Cap

3 Yr Returns

21% - 23%

Mid Cap

3 Yr Returns

28% - 30%

Large & Mid Cap

3 Yr Returns

25% - 27%

Small Cap

3 Yr Returns

33% - 35%

Multi-Cap

3 Yr Returns

27% - 29%

Focused Funds

3 Yr Returns

22% - 24%

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What are Multi Cap Mutual Funds?

Multi-cap mutual funds are open-ended equity funds that invest at least 25% each in large, mid and small-cap companies. It has a balanced approach, which enables investors to balance risk and earn returns from the potential growth of these companies.

The investment process in a multi cap fund is just like any other fund. You can either choose to put in a lump sum amount or start a SIP. In case of a SIP investment plan, the minimum amount starts from as low as INR 100. Nonetheless, the minimum amount tends to change as per the mid cap mutual fund you are choosing to invest in.

Why Add Multi Cap Mutual Funds to Your Portfolio?

Annualised returns range between 18% to 22%
The risk factor is balanced by investing 25% each of the corpus in large-cap companies, mid and small-cap companies
Diversifies the investment portfolio by investing in various companies with different market capitalisation
Ideal for new inventors and investors with a long-term investment horizon

Advantages of Investing in Multi Cap Mutual Funds

Investing in the top multi-cap mutual funds has certain advantages over other types of mutual funds. Following are some of the benefits of multi-cap mutual funds for you to consider before starting your investment.

Diverse Portfolio
Multi-cap mutual funds provide a diverse portfolio consisting of equities of companies from different market capitalisations (large cap, mid cap and small cap) for long-term growth.
Exposure to Key Sectors
Since multi-cap mutual funds invest in companies of different market capitalisation, you get exposure to all types of companies and industries in the Indian economy and enable you to grasp all opportunities.
Lower Risk
The best of multi-cap funds diversify the exposure to risk among several sectors that perform differently as per market conditions.

Who Should Invest in Multi Cap Mutual Funds?

The following investors can start investing in multi cap mutual funds.

New Investors
As a beginner, you may not know the risk involved with investing in a certain size of company. So, the option of multi cap funds becomes the best fit.
Long-Term Horizon Seekers
With a time horizon of more than 5 years, the return on multi cap funds is quite high. So, if you want to fulfill your long-term financial goals, then a multi cap fund is a great option for you.
Balanced Exposure Seekers
Multi cap mutual funds offer growth opportunities to investors from mid and small-size companies while reducing the volatility concerns by investing in large cap funds simultaneously.

Things to Consider Before Investing in Multi Cap Funds

You must consider the following points before you start to invest in the top multi cap funds.

Investment Goals
Having a proper investment goal is crucial before investing in multi cap funds. If you want to maximise your multi-cap fund returns, you must have an investment horizon of more than 5 years.
Risk
Investing in multi-cap mutual funds leads to exposure to risks which come with stock market volatility. These funds invest in different market caps, such as small and mid cap, making them riskier than large-cap mutual funds.
Performance
Analyse and research the past performance of multi-cap mutual funds to choose the best multi-cap funds in 2024. It will help you shortlist the funds showing consistent returns over a long period.
Expense Ratio
Before investing in multi-cap mutual funds, you must evaluate the expense ratio and whether it is feasible for you. Choosing a multi-cap mutual fund with a low expense ratio will enable you to earn higher profits.

Limitations of Investing in Multi Cap Mutual Funds

Even though the top multi-cap funds give you significant benefits, there are certain limitations that you must be aware of. Following are some disadvantages to consider before investing.

Difficulty in Managing
Managing multi-cap mutual funds can be difficult in comparison to single-market capitalisation. This is because the fund managers invest the funds in various market capitalisation sectors.
High Expense Ratio
When you invest in a multi-cap mutual fund, you may have to pay a higher expense ratio than large-cap mutual funds. Paying a higher expense ratio reduces the profit and leads to lower returns.
Concentration Risk
If multi-cap mutual funds become over-concentrated in a particular market sector, it reduces the chances of earning higher returns and the investors get exposed to high risks.

How to Invest in Multi Cap Mutual Funds Through INDmoney?

Investing in the top multi-cap mutual fund through INDmoney is simple and quick. You can follow these steps to start investing.

Step 1
Download the INDmoney app and create your free investment account by completing your KYC ( Know Your Customer).
Step 2
Once your Free investment account is ready, you can either search for a multi cap mutual fund or go to the mutual fund section and tap on multi cap mutual funds.
Step 3
Choose a multi cap mutual fund by looking at aspects like past returns, volatility, downside capture ratio, AUM, Expense ratios and underlying stocks and sectors.
Step 4
You can choose to set up SIP in multi cap mutual funds or even invest as lumpSum. Once you are on the individual multi cap mutual Fund page click from the bottom “One-time” for lump sum investment or “SIP” for systematic investment plan.
Step 5
Choose the amount that you want to invest as SIP or LumpSum.
Step 6
Set up payments. If you choose to set up SIP in multi cap mutual funds, you can do a free automatic pay set up via bank mandate or UPI. If you choose to invest in lumpsum (one-time) then you can pay via UPI, netbanking, NEFT or RTGS.

Should You Invest in a Multi Cap Fund?

Investing in a multi-cap mutual fund could be a great option for you as the primary objective of such funds is to offer exposure to different sizes of companies. It enables you to diversify your portfolio and simultaneously reduce the risk. However, you must assess the past performance of the multi-cap mutual funds before investing in them.

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Frequently Asked Questions

The main advantage of investing in multi-Cap Funds are that they invest a minimum 25% allocation of their total corpus in large-cap, mid-cap, and small-cap companies which helps in diversification of portfolio and will as reduces the risk as your money is invested in multiple sectors across different market capitalization.

You must analyse the fund’s portfolio, past performance, expense ratio and performance of fund managers to choose the best-performing multi cap mutual fund.

Multi-cap mutual funds invest 75% of the total asset in equity and equity-related stocks of large, mid and small-cap companies. In addition, the minimum investment of each sector must be 25%.

No, there is no such lock-in period for multi-cap funds. You can redeem the return anytime. However, you must pay an exit load charge when selling the investment, which is different for different types of multi-cap funds.

You can visit the INDmoney website and create your account to start investing in mutual funds online. It is a digital process with no paperwork required, and you can choose the fund according to your preference.

The following are the three types of multi-cap mutual funds:

Concentrated on Large Cap Companies: It is a type of multi-cap mutual fund that primarily focuses on investing in stocks of large-cap companies, more than 25%. After that, it seeks investment opportunities in small and mid-cap companies.
Concentrated on Mid/Small Companies: These multi-cap mutual funds seek good investment opportunities in mid and small-cap companies. It then looks for investment opportunities in large-cap companies to reduce the chances of risk.
Funds with No Specific Focus: Apart from the minimum investment limit of 25% of the corpus in each market capitalisation, these mutual funds do not focus on any specific capitalisation.

Multi-cap mutual funds are taxed in the following ways:

Capital Gains Tax: If you sell the multi-cap mutual funds investment within 1 year of investing, you must pay a tax of 15%, known as short-term capital gains (STCG). In case you hold the investment for one year or more, the gains are called long-term capital gains (LTCG). If you earn returns up to Rs. 1 lakh in a financial year, it is tax-free and earning more is taxed at 10% of the exceeding amount.
Dividend Taxation: Dividends are added to the investor’s income and are taxed as per their applicable income tax slab.

Key Differences Between Multi Cap and Flexi Cap Mutual Funds are:

On the basis of Equity Exposure:

Multi-Cap Funds require a minimum of 75% in Equities where is Flexi Cap requires a minimum of 65% in Equities.

On the basis of Market Cap Allocation:
As per SEBI, Multi-Cap Funds are required to have a minimum 25% allocation of their portfolio in large-cap, mid-cap, and small-cap companies where as Flexi-Cap Funds are free to invest in any market cap because they have no mandate