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Multi cap Funds


Equity mutual fund portfolios comprise stocks of large cap, mid-cap and small cap companies. Each company listed on Indian stock exchanges is defined by its asset size or ‘market-capitalisation. Most commonly known as ‘market-cap’, it is the total current value of a company in relation to its current outstanding shares and the current price of one share.

There are large cap, mid-cap and small cap companies; large cap companies are the biggest corporate houses; mid-cap ones are medium to small enterprises and small cap companies are largely developing or starting-up. While large cap companies are known to give steady returns, the returns from mid to small cap companies are higher.

There are two crucial things to consider before you invest in any of these funds, the first, how much risk are you willing to bear? The second, what are your expectations of returns on investment? If you’re a conservative or new investor, then large cap funds are ideal. If you are experienced in market movements and prefer holding your investments longer to maximise returns, you may prefer investing in mid or small cap funds. But what if you wanted a combination of more than one of these?

Multi cap funds stand out for many reasons, the main one being, they’re a flexible investment option. The flexibility comes from the fact that they are diversified portfolios, with stocks allocated across all market-caps. The proportions of allocations vary and are strategised based on investment objectives.

Multi cap Mutual Fund Plans Recommended by Angel BEE

Multi cap Mutual Funds are also known as diversified funds, since the stocks allocated in these portfolios belong to all three market-caps (large cap, mid-cap and small cap). These funds not only help you explore each market-cap, they also have the potential to give you relatively higher returns on investment. Some funds perform better than others and some even out-perform the benchmark.

Each fund type’s main objective is capital appreciation, focusing on companies that have a potential for higher growth. The most recommended funds are those which create a balance or offer a trade-off between growth, risk and NAV. Here are some plans recommended by us

Top Multi cap Funds in India

Here are some factors we consider when we pick the top 10 Multi cap Funds:

  • Investment Objective and Past Performance: Each fund should give you appreciated returns if the individual stocks have a higher growth potential. The past performance not only gives an idea of expected returns but also how the NAV reacts in different market cycles. According to market experts, the best funds should give you between 12% to 18% annualised returns.

  • Limited Downside: Each fund responds differently in bullish and bearish markets; some recover quicker than most when markets slump. The top diversified funds are expected to have a limited downside of 3 months to 1 year.

  • Highest Returns With SIP: Most investors prefer investing systematically rather than in lump-sum. The best funds give highest returns even to SIP investors.

Everything You Need to Know About Multi cap Funds

Multi cap funds are also called diversified funds because each portfolio comprises of stocks from large-, mid and small cap companies. These funds are more flexible, and the stock proportions are curated to meet varied investment objectives. Diversified funds have been known to do better than other fund types, in some instances even out-performed their benchmark. The best funds have given annualised returns of between 12%-18% in a five-year average.

These funds are also considered better wealth creators, because of the asset composition. The mixed-bag of market-caps means in a bullish market, you can get the highest returns from mid & small cap stocks; in a bearish market the stability of large cap stocks, balances the loss from volatility of the other stocks. For low-moderate risk takers, these funds are an ideal investment option.

Why Multi cap Mutual Funds?

Here’s why you should invest in Multi cap Mutual Funds:

  • Diversified Portfolio: The corpus of these portfolios is allocated across all market-caps. This diversification offers you flexibility and you can get an idea of how each stock performs in varied market cycles. Moreover, it becomes easier for fund houses to manage market risks efficiently in these type of fund portfolios.

  • Highest Returns and Balanced Risks: These funds are known to give superior returns over short as well as long-term investment periods. They’re a great investment opportunity because of the stock allocation across all market-caps. In upward or bullish market movements, mid and small cap stocks give extremely high returns (between 12%-18%). When markets witness a downturn, the stable large cap stocks give you steady returns and balance the risks associated with the volatility of mid and small cap stocks.

  • Systematic Investment: There are SIP (Systematic Invest Plans) for investing in these funds. Moreover, past performance shows, you can get higher returns even in a SIP option because of the diversified allocations.

  • Investment Objectives: Investment objectives take precedence when curating diversified-fund portfolios. Be it maximising returns, minimising risks or investment holding period, you should get maximum benefits out of your investment.

  • Suitable for Any Risk Appetite: Whether you are a conservative, moderate or high risk-taker, you can choose a portfolio which suits you best. These funds have allocations in large, mid and small-cap stocks, which means during positive market movements, everyone can reap benefits and during market slumps, risks are reduced.

  • Suitable for Short and Long-term Investment Holding: Whether your financial goals are three years, five years or beyond seven years, the funds give the highest annualised returns over any period. In some instances, the best funds have outperformed the benchmark.

Get Better Returns with Multi cap Mutual Funds

Since multi cap funds are diversified and balanced across all market caps, you can maximise benefits in any market situation. Here are some things to consider, in getting the best returns on your investment:

  • Fund Rating: The fund rating is crucial when it comes to quality. Funds ranked between 1 & 2 are considered the top ones to invest in.

  • Past Performance: Most investors are of the opinion; past performance is not a guarantee of future returns. However, a fund’s track record is an important indicator of how the NAV of each stock responds in different market situations. Some funds have historically given annualised returns between 12%-18%.

  • Holding Period: These funds can be held for short and long investment periods. The flexibility of asset allocation means you can get great returns in any time-frame. Market experts recommend holding any investment for at least 3-5 years to get an idea of how stocks respond to market movements and their ability to recover from losses arising out of market slumps.

  • Wait for Market Volatility to Ease: Just as the future of a fund’s performance is unpredictable, so is volatility. Markets situations do not remain the same and just because some stocks perform badly during slumps, does not mean you beat a hasty retreat from your investment. It is better to wait until market situations have settled and stocks start recovering. More often, in turbulent times mid and small cap stocks will dive in negative markets, on the other hand, large cap stocks—in the same portfolio—will remain stable and give you consistent returns.


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