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Multi Cap Funds

Multi-cap funds are diversified investment options that allocate funds across various company sizes, from small cap to large cap. They offer flexibility...

Multi-cap funds are diversified investment options that allocate funds across various company sizes, from small cap to large cap. They offer flexibility and aim to maximise returns by adapting to changing market conditions.

Best Multi Cap Funds

Fund Name
AUM
3Y Returns
NAV

About Multi Cap Funds

 

  • Multi cap mutual funds are an attractive option for investors looking to maximise their portfolio diversification. These funds provide access to a wide range of stocks from large caps down to small caps. By investing in different market sizes, multi cap mutual funds allow investors to adjust their asset allocations according to their risk tolerance and investment goals.
  • In addition, multi cap mutual funds are managed by experienced professionals who have knowledge and expertise in stock selection across multiple market sizes. As such, these funds offer the benefit of professional portfolio management with an added layer of diversification that can help reduce overall volatility resulting from concentrated exposures.
  • Overall, multi cap mutual funds offer active management and diversification benefits which make them appealing options for many types of investors. These funds allow investors to easily take advantage of market shifts while maintaining a well-balanced allocation of assets aimed at achieving long-term growth objectives.

 

How Do Multi-Cap Funds Work?

 

Multi-cap funds typically include stocks of companies that fall under the categories of small-cap, mid-cap, and large-cap. Multi-cap funds aim to permit investors to adapt their portfolios to certain asset allocations aligned with their own risk tolerance and investment objectives. This is done via the investment of an investor’s capital in various market sizes. In case you wish to aim for portfolio diversification as an investor, multi-cap mutual funds may be a consideration. Such mutual funds let you gain access to a variety of companies whose stocks are invested in through the fund. Multi-cap mutual funds work by having professional fund managers allocate your capital to the stocks of various companies of different sizes with the goal of investment returns. Such funds have the advantage of expertise in portfolio management and in the selection of appropriate equity to promote portfolio diversification. In any multi-cap fund, a minimum of 65% of the portfolio is invested in equity, but this could be more depending on the particular fund and investors’ goals.

 

Features of Multi Cap Funds

 

  1. Multi cap mutual funds offer diversification as they are invested in a variety of market capitalisation stocks. This makes it possible for investors to access a broader range of potential investments and reduces the impact of any single stock on the performance of the fund.
  2. These funds are managed by domain experts. Such professionally managed multi cap mutual funds also provide investors with access to experienced fund managers and portfolio construction expertise, helping them ensure that their investments are in line with their individual goals.
  3. Investors can use these funds for both long-term investment strategies, such as retirement planning, or short-term investment goals, depending on their timescale and objectives.
  4. Multi cap mutual funds also offer a range of risk levels to suit varying investor needs and risk appetites. These could include aggressive growth options, which aim for high returns but involve higher risks, or more conservative income strategies, which focus on capital preservation above aggressive growth.

 

Advantages of Investing in Multi Cap Funds

 

  1. Diversified asset allocation: Multi cap funds offer a diversified asset allocation across sectors, companies, and market caps which helps reduce risk while maximising the return potential.
  2. Adaptability to market conditions: The fund manager can adjust their investment exposure depending on the prevailing market conditions, allowing them flexibility in their investment strategy.
  3. Tax efficiency: Some multi cap funds are more tax efficient than other types of investments as they may operate under the Equity Linked Savings Scheme (ELSS), where investments up to 1.5 lakh are eligible for tax deduction under Section 80C of the Income Tax Act 1961.
  4. Consistent returns: By investing across different market caps, there is less chance of losses due to either overvaluation or undervaluation in any segment of the market, as multi cap funds are less volatile in comparison to single-cap funds.
  5. Professional management: Multi cap funds are managed by experienced fund managers who carefully select and monitor each stock to help investors minimise risk and maximise returns through a diversified approach towards equity investments.

 

Risks Involved in Multi Cap Funds

 

  1. Investing in multi cap funds carries risks such as tracking the broader market indices and reflecting overall market sentiment, resulting in potential losses when there is a downturn in the market.
  2. Sectoral risks are also associated with multi cap funds, which means that an entire sector may perform poorly, impacting all investments held within it.
  3. Misallocation of assets or liquidity risk can lead to underperformance or difficulty in liquidating holdings when needed.

In conclusion, investing in multi cap funds can be a rewarding option, but there are risks involved. Understanding these risks and their implications is crucial for making informed investment decisions.

 

Factors To Consider Before Investing in Multi-Cap Funds

 

If you are considering an investment in a multi-cap fund, there are some considerations to note before you invest, one of which is finding out about the extent to which the fund may offer true portfolio diversification to suit your individual financial goals. Here are some points to ponder before you invest:

  • The main goal of any multi-cap fund is to provide portfolio diversification for investors. In this regard, it is important for investors to seek funds that offer this in the truest sense. It is important to find out the asset allocation of a multi-cap fund and which sectors it invests in. As an investor, you should also check on the percentage of allocations to different market capitalisations in any particular fund.
  • Before you take a leap of faith and possibly consider a fund and its fund manager seriously, you should do your own research on the particular fund. Seek out information and find out about the past performance and future prospects of the companies invested in.
  • Remember that investing in funds that allocate a large portion of capital to equity may carry some risks. As an investor, it is important to evaluate your own risk tolerance and think about the risks which may be involved in multi-cap funds that invest in a variety of company market capitalisations.
  • Consider that funds are managed by domain professionals and if you are an investor who wishes to have your portfolio managed by an expert, you may consider such a fund. Additionally, experts bring the ability to manage your portfolio based on your personal financial goals. In case this suits your requirements, you may think of such funds.

 

Who Should Invest in Multi Cap Funds?

This type of mutual fund helps you invest in different types of stocks to spread out your risk. But at the same, you can still have the potential to earn higher returns because of the diversification angle. Multi cap mutual funds are more diverse than single sector funds, so they tend to be less volatile than individual stocks. Lesser volatility means lesser risk. This type of fund is an ideal option for those who don’t want to take on a lot of risks yet want the chance to earn steady returns over the long term.

Taxability of Multi Cap Funds

Multi Cap Funds are investment funds that provide exposure to a range of market capitalisations (small, mid, and large companies). The process by which these funds are taxed depends on the holding period.

  • If held for less than 12 months, returns earned from multi cap funds are subject to short-term capital gains tax. This means that any profits generated will be taxed at 15%.
  • If the holdings of multi cap funds are held for more than a year, they will be subject to long-term capital gains tax. If the gains are more than ₹1 lakh, they will be taxed at 10%

Also, note that dividends received from these funds are not tax exempted. They are added to your income and taxed accordingly.

 

How To Invest in Multi-Cap Funds?

 

Investing in the multi-cap Mutual Fund is hassle-free when done through your Angel One account. You just have to follow these simple steps: Step 1: Log in to your Angel One account. Note: In case you do not have an account with Angel One, you can open a demat account with us in under a few minutes by submitting the necessary documents. Step 2: Determine a multi-cap fund that suits your needs and risk profile. You can learn more about each multi-cap fund on the Angel One app. Things to consider at this stage are:

  1. Search for the fund you want to invest in.
  2. Analyse the fund’s past performance, tax incidence, and the sectors and companies it invests in. You can also calculate the potential returns using the calculator.
  3. Evaluate the fund’s level of risk, its ratings and expense ratio.

Step 3: Once you finalise the multi-cap fund(s) you want to invest in, open your Angel One account, go to the Mutual Funds section, and look for it

  1. Decide whether you want to invest via SIP or make a one-time investment
  2. Decide your monthly SIP date. Now, enter the amount you want to invest and choose the payment mode.
  3. After placing the order, you can create an AutoPay to make hassle-free future instalments in case of SIP investments.

 

Top 10 Multi Cap Funds

Fund Name AUM (₹ Cr) 3Y CAGR (%) Expense Ratio (%) 1Y Return (%)
Nippon India Multi Cap Fund 48,808.64 22.71 0.71 10.94
Kotak Multicap Fund 23,057.25 25.52 0.45 12.81
SBI Multicap Fund 22,975.18 18.44 0.83 5.85
HDFC Multi Cap Fund 19,884.94 21.31 0.77 8.42
ICICI Pru Multicap Fund 15,845.20 21.48 0.94 9.50
Axis Multicap Fund 9,091.56 23.72 0.72 8.74
Quant Multi Cap Fund 7,456.20 13.50 0.72 -0.76
Aditya Birla SL Multi-Cap Fund 6,504.26 19.09 0.76 11.17
Mahindra Manulife Multi Cap Fund 6,045.74 23.01 0.41 12.32
HSBC Multi Cap Fund 5,176.73 25.20 0.61 10.25

Note: The above data is as of February 2026

Nippon India Multi Cap Fund

This fund aims to grow your money over the long term by investing across large, mid, and small-cap stocks. It focuses on sectors that benefit from India’s economic growth and reforms. 
Fund Managers: Sailesh Raj Bhan & Ashutosh Bhargava

Kotak Multicap Fund

This fund looks for long-term capital growth by investing across all three market segments. It uses detailed research to maintain a balanced portfolio across large, mid, and small caps. 
Fund Managers: Devender Singhal & Abhishek Bisen

SBI Multicap Fund

This fund targets long-term growth using a growth-style investing approach. It currently has higher exposure to sectors like financials and basic materials. 
Fund Manager: SBI Equity Team

HDFC Multi Cap Fund

This fund aims to build wealth over time by investing at least 25% each in large, mid, and small caps. It prefers companies with strong fundamentals and stable business models. 
Fund Manager: Amar Kalkundrikar

ICICI Pru Multicap Fund

One of the older funds in this category, it focuses on long-term capital appreciation. It invests in high-conviction ideas across different sectors and market caps. 
Fund Manager: Lalit Kumar

Axis Multicap Fund

This fund follows a bottom-up stock-picking strategy and focuses on quality companies across market caps. It aims to reduce volatility while still delivering steady long-term returns. 
Fund Manager: Shreyash Devalkar

Quant Multi Cap Fund

This fund uses Quant’s VLRT strategy—Valuation, Liquidity, Risk, and Timing—to pick stocks. It is usually more aggressive and may see higher portfolio churn than peers. 
Fund Manager: Quant Investment Team

Aditya Birla SL Multi-Cap Fund

This fund aims for long-term growth through a diversified portfolio. It uses research-driven stock selection and invests across sectors through different market cycles. 
Fund Managers: Abhinav Khandelwal & Harshil Suvarnkar

Mahindra Manulife Multi Cap Fund

This fund focuses on long-term returns by investing in high-quality businesses. It also pays attention to risk control and aims to reduce downside volatility. 
Fund Managers: Fatema Pacha & Vishal Jajoo

HSBC Multi Cap Fund

This fund aims to generate long-term growth through active investing. It tries to capture opportunities across both emerging themes and established sectors. 
Fund Managers: Venugopal Manghat & Mahesh Chhabria

Multi Cap Funds FAQs

Multi cap funds can carry both higher and lower risks depending on the investments held in the fund. These funds are actively managed, which allows for more flexibility when it comes to portfolio optimisation and risk management. But you should pay close attention to the following to make an informed investment decision:
- Underlying asset allocation
- Performance of the fund

This decision depends on individual needs, goals, and financial circumstances. You should do your own research into multi cap mutual funds before investing, as there are different types with varying returns and levels of risk involved. It is also important to factor in any applicable fees associated with investing in a multi cap mutual fund.
The expected returns of a multi cap mutual fund can vary depending on several factors, such as asset allocation, performance history, fee structure, and market fluctuations. Mostly these funds have a potential for higher returns than other types of funds due to their ability to allocate capital across different asset classes. However, these potential returns come with increased levels of risk.
There are certain risks associated with investing in multi cap mutual funds, such as market volatility and currency exchange rates. Additionally, since these investments involve actively managing assets within different asset classes, there is always potential for higher decision-making costs or poor portfolio diversification, which could lead to losses if not managed properly.
The taxation rules applicable to multi cap funds depend largely on where they are domiciled, but generally, they will be subject to taxes like many other types of investments depending on how long you hold them and what gains or losses accrue during the period you hold them. It is important to consult a qualified tax advisor when making decisions about these types of investments, as every investor’s situation is unique.
This is up to the investor’s discretion based on their current financial standing and future goals/needs. You should conduct thorough research before committing any amount of money to a particular investment vehicle. Investors should also take into consideration any applicable fees associated with such investments before making their final decision about how much money to commit towards one or multiple products within this group.
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