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2 mins Read | 6 Months Ago

Best Multi Cap Mutual Funds in India to Invest

Best Multi Cap Mutual Funds in India

 

Multi Cap Mutual Funds invest in a portfolio of companies of various sizes and across different sectors. This means the investments are made in Small Cap, Mid Cap and Large Cap companies. This diversification provides a balanced approach—stability from Large Cap investments and growth opportunities from Mid and Small Cap holdings. Simply put, portfolio diversification gives it the name - Multi Cap. Multi Cap Mutual Funds give fund managers the freedom to diversify as per their choices. For instance, fund managers for Small Cap Funds cannot invest in the shares of Mid Cap or Large Cap companies no matter how exciting the opportunity is. That is not the case with Multi Cap Mutual Funds. Hence, these funds are considered profitable by retail investors. 

List of the best Multi Cap Mutual Funds in India

Here are some of the best Multi Cap Mutual Funds in India:

ICICI Prudential Multi Cap Fund

  • Fund size: Rs 8,761 crore

  • Returns (p.a.): +21.55%

Quant Active Fund

  • Fund size: Rs 6,059.61 crore

  • Returns (p.a.): + 29.27%

Nippon India Multi Cap Fund

  • Fund size: Rs 20,916 crore

  • Returns (p.a.): + 26.56%

Mahindra Manulife Multi Cap Fund

  • Fund size: Rs 2,205 crore

  • Returns (p.a.): + 26.33%

Invesco India Multi Cap Fund

  • Fund size: Rs 2,675 crore

  • Returns (p.a.): + 21.78%

Why invest in Multi Cap Mutual Funds?

  • Ability to diversify across sectors and market caps

Multi Cap Mutual Funds have a diversified portfolio across companies of different sizes and in various sectors, reducing the risk factor. Market sectors can shift in any direction at any given time, spreading the risk. A diversified portfolio minimises the overall portfolio risk.

  • Exposure to potential opportunities

These funds are not confined to specific market caps or sectors. Investors gain exposure to all sectors and companies driving the Indian economy. This broad exposure ensures that investors do not miss out on potential opportunities available in the market.

  • Flexible portfolio allocation

The flexibility of choosing between Large, Mid and Small Cap stocks allows Multi Cap Mutual Funds to adapt their portfolio composition to suit the prevailing market conditions. For instance, if Mid and Small Cap stocks seem overvalued, the fund managers can move towards Large Cap stocks.

Through this allocation strategy, fund managers can adjust their investment weightage across market caps. This makes the investments adaptable to market fluctuations and positions them advantageously for varying market cycles.

What to consider while choosing Multi Cap Mutual Funds

Here is what you need to consider while choosing Multi Cap Mutual Funds: 

  • Take the Expense Ratio into account: A lower Expense Ratio can impact long-term returns. Investors should consider this before investing

  • Check the fund manager's history: Evaluate the fund manager's track record of managing Multi Cap Mutual Funds and their performance over the years

  • Get an overview of the associated risk: Understand the risk-return tradeoff to ensure that the fund's risk aligns with your risk appetite and investment horizon

  • Check the consistency in returns: Analysing a fund's historical performance and consistency provides insights into its reliability and sustainability.

Conclusion

Consistent performance over the years, the potential to surpass market returns and adaptability to the changing market dynamics are some of the key factors that distinguish the best Multi Cap Mutual Funds. When it comes to investing in these funds, the view of the fund manager matters the most. These managers take the decision of spreading the investment corpus across different cap sizes and sectors. It is important to assess the past performance and expertise of the fund manager. Investors seeking growth potential, portfolio diversification and resilience across market cycles find these funds to be an important investment avenue.

Frequently Asked Questions (FAQs):

What should I consider while selecting a Multi Cap Mutual Fund?

While selecting a Multi Cap Mutual Fund, you need to consider the following: 

1.  Fund philosophy: Learn about the fund’s philosophy and investment strategy

2.  Historical performance: Check the fund's performance over various periods - one year, three years and five years

3.  Asset allocation: See how the fund allocation is done for Large Cap, Mid Cap and Small Cap stocks

For Multi Cap funds, what investment strategies should I consider?

Different investment strategies that you can consider for Multi Cap funds include:

●  SIPs (Systematic Investment Plans) vs Lumpsum: See how SIPs perform in comparison to lumpsum investments

● Holding period: Check the historical performance of the fund and what the predictions suggest for the next one, three and five years. You can decide the holding period based on that.

How can I look into risk analysis and mitigation of a portfolio?

Multi Cap Mutual Funds are diverse so you need to assess the risk accordingly. Look into:

1. Market risk: How are the funds affected by the market fluctuations?

2. Sectoral risk: Check how the exposure to specific sectors affects the fund performance

3. Risk mitigation strategies: Understand what strategies the fund managers have used to reduce these risks.  

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