Sushil Bajaj |
📅 Last Updated on: November 3, 2025
Investors are usually curious to know which category of mutual funds achieves growth probabilities while controlling risk. That is where Multi Cap Mutual Funds enter the field. Such funds are invested in large-cap, mid-cap, and small-cap firms in equal proportions and provide diversification in terms of sectors and market capitalization.
Multi-cap schemes, unlike single-category funds, provide stability in the large-caps, growth in the mid-caps, and extra return prospects in the small-caps.
Multi Cap Mutual Funds are diversified equity funds that give at least 25% each to large-cap, mid-cap, and small-cap stocks, as per the regulations of SEBI. With their separate structure, they are less risky than small-cap or mid-cap funds but have higher return potential than pure large-cap funds. In other words, multi-cap funds offer you the advantages of the three worlds – stability, growth, and high returns.
| Multi cap funds are ideal for investors who: |
|---|
| Long-term investors (5+ years) seeking wealth creation. |
| Investors who want diversification across different market segments. |
| Beginners who are unsure about picking between large, mid, or small-cap funds. |
| People who are moderately risk-acceptant. |
Multi Cap Mutual Funds invest across large, mid, and small-cap stocks, offering a balanced exposure to the entire equity market. The most widely used benchmark for this category is the Nifty 500 TRI (Total Return Index).
The Nifty 500 TRI represents the top 500 companies listed on NSE, covering over 95% of India’s total market capitalization. This makes it an ideal yardstick to evaluate how well a Multi Cap Fund performs compared to the overall market.
Some fund houses may also use the S&P BSE 500 TRI as an alternative benchmark, depending on their investment strategy and stock universe.
| Time Horizon | Return |
|---|---|
| 1 Year | 5.56% (31 Oct 2025) |
| 5 Years | 21.10% (31 Oct 2025) |
| Since Inception | 12.50% (31 Oct 2025) |
Prior to investing in a multi-cap fund, remember the following:
By investing in large, mid, and small-cap shares, concentration risk is lowered.
Managers can shift allocations in response to conditions in the market.
Investors can redeem units anytime; proceeds are credited within a business day.
Options are available in both lump sums and SIP.
Stable portfolio strikes a balance between stability and growth options.
No investment is risk-free — Multi cap funds carry their own set of risks, and you should be aware:
| Market Volatility | Economic Cycles | Moderate Risk Profile |
|---|---|---|
| Mid and small-cap holdings make them riskier than pure large-cap funds. | mall-cap and mid-cap stocks can depress returns in market downturns. | Riskier than large-cap funds, but less risky than pure small-cap funds. |
Yes, they are suitable for 5–10 years or even more, providing stability and growth.
Multi-cap funds provide better diversification, while mid-cap funds offer higher growth with higher risk.
In fact, they are perfect for new equity investors due to diversification.
1. Multi Cap: A minimum 25% fixed allocation in large, mid, and small-cap stocks.
2. Flexi Cap: Complete flexibility to allocate across any market cap.
Multi Cap Mutual Funds provide the perfect equilibrium between risk and return. Suitable for investors who desire diversified exposure to market caps but don’t want to manage their portfolio actively, multi-cap funds can yield steady long-term wealth. Multi-cap funds are most appropriate for moderately risky investors who can wait for 5+ years for their investment. By being disciplined through SIPs, you can continuously increase your wealth while having the advantages of diversification.
Disclaimer
This article is for informational purposes only and does not constitute financial advice. Before investing, you should consult a qualified financial advisor, consider your risk tolerance, investment horizon, and review the latest scheme documents, factsheet and disclosures from Mutual Fund.
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