About Multi-Cap Funds
Multi-cap mutual funds are actively managed by professional fund managers who allocate capital based on market conditions, valuation opportunities, and risk considerations. This flexibility allows the fund to adjust exposure across sectors and company sizes over time.
Multi-cap funds aim to balance growth potential with diversification. They are suitable for investors seeking long-term capital appreciation while maintaining exposure to different segments of the equity market within one structured investment vehicle.
How Do Multi-Cap Funds Work?
Multi-cap funds collect money from investors and invest it across large-cap, mid-cap, and small-cap companies. As per SEBI guidelines, these funds must allocate at least 25% of their assets to each category, while the remaining portion can be adjusted depending on market conditions. This ensures balanced exposure across different company sizes.
Professional fund managers actively manage these portfolios. They study company financials, revenue growth, profitability, debt levels, and overall business strength before selecting stocks. Management quality and sector trends are also considered.
Based on market conditions and economic outlook, managers may shift allocations between segments. The aim is to combine stability from large companies with growth potential from mid- and small-cap stocks while managing overall risk effectively.
Top 10 Multi-Cap Mutual Funds to Invest in 2026
| 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
Features of Multi-Cap Funds
Multi-cap funds have a defined structure and regulatory framework that distinguishes them from other equity mutual funds. Their design ensures diversification, active management, and balanced exposure across company sizes.
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Mandatory diversification across market caps: As per SEBI regulations, multi-cap funds must allocate at least 25% each to large-cap, mid-cap, and small-cap stocks. This ensures structured diversification and prevents excessive concentration in any one market segment.
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Minimum equity allocation requirement: These funds maintain at least 75% of their total assets in equity and equity-related instruments, classifying them as equity-oriented schemes with long-term growth potential.
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Balanced risk-return structure: By combining the relative stability of large-cap stocks with the higher growth potential of mid- and small-cap stocks, multi-cap funds typically carry a moderately high risk profile.
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Active portfolio management: While maintaining mandatory allocations, fund managers have flexibility in the remaining portion to adjust sector exposure and optimise opportunities based on prevailing market conditions.
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Clear long-term orientation: Multi-cap funds are generally suited for investors with a 5–7 year investment horizon, aiming for capital appreciation through diversified and professionally managed equity exposure.
Advantages of Investing in Multi-Cap Funds
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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.
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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.
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Tax efficiency: Multi-cap funds are taxed as equity mutual funds. Short-term capital gains (held under one year) are taxed at 20%, while long-term gains above ₹1.25 lakh are taxed at 12.5%. Dividends are added to the investor’s income and taxed as per the applicable slab rate.
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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.
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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.
Factors To Consider Before Investing in Multi-Cap Funds
Before investing in a multi-cap fund, evaluate whether it aligns with your financial goals, risk profile, and long-term strategy. Consider the following factors:
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Asset allocation structure: Review how the fund distributes investments across large, mid, and small-cap stocks. Check sector exposure to ensure true diversification and avoid concentration risk.
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Fund performance and consistency: Analyse historical performance across market cycles. Focus on consistency rather than short-term returns, and compare performance with relevant benchmarks.
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Risk profile and volatility: Multi-cap funds have significant equity exposure. Assess whether you are comfortable with potential market fluctuations, especially due to mid- and small-cap allocations.
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Fund Manager expertise: Evaluate the track record and investment approach of the fund manager. Strong research capabilities and disciplined execution play a key role in long-term outcomes.
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Expense ratio and costs: Review management fees and other charges. Lower costs can positively impact long-term returns, particularly in long-duration investments.
Who Should Invest in Multi-Cap Funds?
Multi-cap funds are suitable for investors with the following profiles:
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Long-term investors: Investors with a time horizon of at least five years may benefit from multi-cap funds, as they allow participation in long-term equity growth across large, mid, and small-cap companies.
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Investors seeking diversification: Those looking for broad equity exposure without managing multiple separate funds can consider multi-cap funds, which provide balanced allocation across different market capitalisations within one portfolio.
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Moderate to high-risk investors: Market fluctuations are part of equity investing. Investors comfortable with volatility, especially from mid- and small-cap exposure, may find multi-cap funds aligned with their risk profile.
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SIP investors: Regular investors using SIPs can use multi-cap funds to build wealth steadily, as disciplined contributions help reduce the impact of short-term market volatility over time.
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.
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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 20%.
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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 ₹1.25 lakh, they will be taxed at 12.5%
Also, note that dividends received from these funds are not tax-exempt. They are added to your income and taxed accordingly.
How To Invest in Multi Cap Funds on Angel One?
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.
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:
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Search for the fund you want to invest in.
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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.
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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
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Decide whether you want to invest via SIP or make a one-time investment
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Decide your monthly SIP date. Now, enter the amount you want to invest and choose the payment mode.
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After placing the order, you can create an AutoPay to make hassle-free future instalments in case of SIP investments.
