Top 5 Multi-Cap Funds For Long Term Investing
24 May 2025 7 mins Investing
Investing in multi-cap funds has become increasingly popular among Indian investors due to their potential for high returns and diversification. Unlike large-cap or small-cap funds, multi-cap funds invest across market capitalizations, making them a versatile option for investors looking to balance risk and reward. In this article, we will delve into the top 5 multi-cap funds that are well-suited for long-term investing, backed by data and expert insights. Understanding these funds can significantly impact your financial decisions and help you achieve your investment goals.
What is a Multi-Cap Fund?
A multi-cap fund is a type of mutual fund that invests in equities across various market capitalizations—large, mid, and small-cap stocks. This approach allows investors to benefit from the growth potential of small and mid-sized companies while also having the stability of large-cap stocks. According to the Association of Mutual Funds in India (AMFI), multi-cap funds have grown significantly in popularity, with assets under management (AUM) exceeding ₹2 lakh crore as of early 2023.
Why Choose Multi-Cap Funds for Long-Term Investing?
Multi-cap funds offer several advantages for long-term investors:
Diversification: By investing across various market capitalizations, multi-cap funds reduce risk and volatility. For example, in the fiscal year 2021-22, the Nifty 50 index (large-cap) returned 18.9%, while the Nifty Midcap 150 returned 58.5%, showcasing the benefits of having exposure to both segments.
Growth Potential: These funds can capitalize on both established and emerging companies, providing significant growth opportunities. The Indian economy is projected to grow at a CAGR of 6.5% over the next five years, making it an ideal environment for multi-cap funds to thrive.
Flexibility: Fund managers can adapt to market changes, ensuring that the fund remains competitive. This flexibility is crucial during economic downturns, where a shift in focus can mitigate losses.
Professional Management: Experienced fund managers make informed investment decisions, which can lead to better returns. Many fund houses employ a team of analysts to gauge market trends, which enhances their investment strategy.
Top 5 Multi-Cap Funds for Long Term Investing
1. Axis Multicap Fund
The Axis Multicap Fund is one of the leading multi-cap mutual funds in India, known for its strong performance and robust management. It primarily invests in large-cap and mid-cap stocks, making it a balanced option for investors. The fund's strategy focuses on identifying high-quality growth companies.
Performance: The fund has delivered an impressive annualized return of approximately 14% over the last five years, outperforming its benchmark, the Nifty 500. Additionally, it has consistently ranked among the top quartile in its category.
Expense Ratio: 1.75%
Minimum Investment: ₹5,000
2. Kotak Standard Multicap Fund
This fund has been a consistent performer in the multi-cap category, focusing on a diversified portfolio that includes mid and small-cap stocks alongside large-cap stocks. Its investment philosophy is rooted in value investing, identifying undervalued stocks with strong fundamentals.
Performance: The fund has generated around 13.5% annualized returns over the past five years, with a strong focus on sectors like technology and consumer goods, which have shown resilience and growth potential.
Expense Ratio: 1.64%
Minimum Investment: ₹5,000
3. SBI Multicap Fund
The SBI Multicap Fund is managed by one of the most trusted names in the Indian financial market. It has a well-balanced portfolio that benefits from both large and small-cap investments. The fund aims for capital appreciation through a diversified approach across sectors.
Performance: The fund has provided about 12% returns annually over the last five years, with significant contributions from sectors such as finance and pharmaceuticals, which have shown robust growth during the recovery phase post-COVID.
Expense Ratio: 1.85%
Minimum Investment: ₹5,000
4. Mirae Asset India Equity Fund
This fund focuses on long-term capital appreciation through investments in a diversified portfolio of equities, including large-cap and mid-cap stocks. It employs a systematic investment process that includes rigorous research and analysis.
Performance: The fund has shown remarkable growth, with annual returns of around 15% over the past five years, benefiting from its strategic allocation to high-growth sectors such as information technology and consumer discretionary.
Expense Ratio: 1.87%
Minimum Investment: ₹5,000
5. Franklin India Equity Fund
With a long-standing reputation in the Indian mutual fund industry, Franklin India Equity Fund invests across a range of sectors and market caps, ensuring a diversified investment approach. The fund emphasizes research-driven investment strategies.
Performance: The fund has achieved annualized returns of approximately 11% over the last five years, with a notable performance in sectors like healthcare and utilities, which have shown resilience during economic downturns.
Expense Ratio: 1.93%
Minimum Investment: ₹5,000
Performance Comparison of Top Multi-Cap Funds
Fund Name | Annualized Returns (5 years) | Expense Ratio | Minimum Investment |
|---|---|---|---|
Axis Multicap Fund | 14% | 1.75% | ₹5,000 |
Kotak Standard Multicap Fund | 13.5% | 1.64% | ₹5,000 |
SBI Multicap Fund | 12% | 1.85% | ₹5,000 |
Mirae Asset India Equity Fund | 15% | 1.87% | ₹5,000 |
Franklin India Equity Fund | 11% | 1.93% | ₹5,000 |
Factors to Consider When Investing in Multi-Cap Funds
When selecting a multi-cap fund, consider the following factors:
Investment Horizon: Ensure the fund aligns with your long-term investment goals. Multi-cap funds are best suited for investors with an investment horizon of at least 5-7 years to ride out market volatility.
Risk Appetite: Understand your risk tolerance and choose funds that match it. Multi-cap funds can exhibit volatility, especially during market corrections, so it's essential to assess your comfort level with potential fluctuations.
Fund Manager's Track Record: Research the fund manager's experience and past performance. A fund manager with a proven track record can significantly influence the fund's success.
Expense Ratios: Lower expense ratios can lead to better returns in the long run. Over time, high fees can erode returns, so it's crucial to consider the cost-effectiveness of the fund.
Frequently Asked Questions (FAQs)
What are multi-cap mutual funds?
Multi-cap mutual funds invest in a diversified portfolio of large-cap, mid-cap, and small-cap stocks, providing flexibility and growth potential. They are designed to adapt to changing market conditions, which can be beneficial for long-term investors.
How do multi-cap funds perform during market downturns?
Multi-cap funds can provide a cushion during market downturns due to their diversified nature, but performance can vary based on market conditions and fund management. Historically, funds with a higher allocation to large-cap stocks tend to be more resilient during market corrections.
What is the ideal investment horizon for multi-cap funds?
Multi-cap funds are best suited for long-term investors with an investment horizon of at least 5 years. This timeframe allows investors to benefit from market recoveries and the compounding effect of returns.
What should I look for in a multi-cap fund?
Consider factors like performance history, expense ratio, fund manager's experience, and alignment with your investment goals. Reviewing the fund's investment strategy and sector allocation can also provide insights into its potential for growth.
Are multi-cap funds suitable for beginners?
Yes, multi-cap funds can be suitable for beginners due to their diversified portfolio and potential for growth. They offer a balanced exposure to various sectors and market caps, making them an attractive option for novice investors.
Conclusion
Investing in multi-cap funds can be an excellent strategy for long-term financial growth. The top 5 multi-cap funds discussed in this article offer a blend of stability and growth potential, making them ideal choices for investors. Always remember to assess your individual financial situation and investment goals before making decisions. Additionally, staying informed about market trends and economic indicators can enhance your investment strategy.
Ready to start your investment journey? Consult a financial advisor today or explore our resources for more insights!
Find the Best Mutual Funds for your every investment goal. Explore top mutual funds and start your SIP Today!
Find the Best Credit Card for your spending habits. Explore top credit cards and maximize your rewards.
Get a Personal Loan that fits your needs. Apply for loans from Rs 1000 to Rs 15 Lakhs with competitive rates.
Author - Abhishek Sonawane
Abhishek Sonawane, an MBA graduate from the prestigious Indian Institute of Management Visakhapatnam (IIMV), brings over ten years of experience in the finance domain. His extensive background includes various roles in financial management and strategy, providing him with a comprehensive understanding of the financial landscape. Abhishek’s expertise and dedication to financial education make him an authoritative voice in personal finance, helping readers make informed financial decisions.