Best Multicap Mutual Funds to Invest in 2024 Watch Now

Multi-cap funds invest in stocks across Large, Mid & Small market cap based on the view of the Fund Manager.
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This flexibility to switch between sectors and stocks belonging to any market capitalisation allows the fund manager to take advantage of a larger pool from which to build and manage the portfolio and deliver returns. Minimum investment in Equity & Equity-related instruments for Multicap funds is 65% of total assets. Multicap funds are a good way to take exposure to broader market and are suitable for investors with a moderate risk appetite.

Multicap funds usually invest in stocks across Large, Mid and Small market cap. This flexibility to switch between sectors and stocks belonging to any market capitalization allows the fund manager to take advantage of a rather extensive pool from which to build and manage the portfolio and deliver returns.
Multicap funds are a good way to get exposure to a broader market and are suitable for investors with moderate risk appetite. Investors who want to cash in on the growth potential of mid and small-cap stocks without exposing themselves to high risk should ideally invest in Multicap funds.
The Multicap Fund Manager has the mandate to change the mix of large/mid/small cap in the fund's portfolio based on his assessment of the risk-reward opportunities in a given period. The mid/small-cap fund manager has less room to reduce the risk quotient and hence these funds are usually more volatile.
Just like any other equity product you need to be invested in a Multi cap fund for the long term (5-7 years) to ensure a better ROI.

Quality of portfolio

An important parameter in shortlisting a fund for investment is assessing the underlying stocks in the portfolio of the fund. This helps you understand how much risk you are willing to take for that anticipated extra return in your portfolio. Avoid funds with large exposure to small and risky companies.

Performance Consistency

Performance consistency is critical as a fund that is at the top today might not continue to be so in the next 1/3/5 years. A fund that has a proven track record of consistently exceeding benchmark returns is what you should opt for. Such funds give us more confidence in the fund managers' ability to do so in the future too. Avoid funds with poor return consistency at all times.

Past 5-year rolling return

You should look at an individual fund's returns performance versus its benchmark on a rolling basis of a reasonable time-frame of say 3 or 5 years rather than every year performance or point to point past performance. Analyzing funds on the basis of past performance is inadequate as past poor performance may get hidden in recent good performance and vice versa.

Turnover ratio

Choosing a fund with the low turnover ratio is your best bet as it helps you avoid brokerage and impact costs. An investor should be wary of these costs as they're hidden (not disclosed by the AMC), but definitely eat up your returns.

Kotak Standard Multicap Fund

Kotak Standard Multicap fund invests across market cap and sectors with a blend of growth and value styles. The fund manager follows a conservative investment style, by investing a higher proportion in large cap stocks as compared to its peers. The fund has been a consistent performer over longer durations. Thus, investors planning to invest for a long-term of 3 to 4 years may find this an ideal investment option. Yet, they should be aware of the scope for low to moderate losses.

For more details, click on MoneyWorks4Me's assessment of Kotak Standard Multicap Fund.

Invesco India Multicap Fund

Invesco India Multicap fund has been managed by fund managers Taher Badashah and Prnav Gokhale since its launch in 2008. Being a Multicap Fund, the fund manager has the flexibility to invest across market capitalizations. The fund was earlier a mid and small cap fund and continues to have higher investment in the mid and small cap space. However, the fund hasn't been consistent in beating its benchmark over the long term.

For more details, click on MoneyWorks4Me's assessment of Invesco India Multicap Fund.

SBI Magnum Multicap Fund

As the name suggests, SBI Magnum Multicap fund invests in large, mid and small cap stocks while maintaining a small exposure to debt/cash instruments when required. Despite being able to invest across market capitalizations, the fund predominantly invests in the large and mid cap space. It has consistently beaten the benchmark over the long term, however, single year performance remains volatile.

For more details, click on MoneyWorks4Me's assessment of the SBI Magnum Multicap Fund.

Aditya Birla Sun Life Equity Fund

Aditya Birla Sun Life Equity Fund is a multicap fund investing across market capitalizations with a slightly higher allocation to large cap stocks. The fund is a fairly consistent performer over the long term. The fund performance has in fact improved considerably since the current fund manager took over in Oct 2012.

For more details, click on MoneyWorks4Me's assessment of the Aditya Birla Sun Life Equity Fund.

Parag Parikh Long Term Equity Fund

Similar to its peers, Parag Parikh Long Term Equity Fund invests in stocks across market capitalization. However, what sets it apart is the fund's international exposure. The fund can hold upto 35% in international stocks and upto 35% in cash if deemed necessary by the fund manager. The fund follows a value investing strategy buying stocks that trade at a discount to its intrinsic value.

The fund has consistently beaten its benchmark over the long term and is the best performing fund in 2022, thanks to its global exposure.

For more details, click on MoneyWorks4Me's assessment of Parag Parikh Long Term Equity Fund.

Your risk appetite

Your flexibility or willingness to take risks is a crucial aspect to consider. Do check whether the investment product is meant for you, both financially and emotionally.

Your asset allocation

Asset allocation is an important aspect of returns. Investing in a popular fund without taking the asset allocation into consideration should be avoided.

Sufficient diversification

It's wise to diversify your investment across 4-5 mutual fund schemes. This way you can ensure that their strategies and portfolio not only complement each other but also your direct stock portfolio.

When investing a lump sum, you need to answer one very important question

Before arriving at the decision, ask yourself, can you expect a good enough return by investing in the fund right now? Ultimately, an equity fund is a collection of stocks and if most of them are currently expensive (and probably show high past returns today); you are likely to get a low return moving forward.
Multi-Cap Mutual Funds in India can be a viable investment option, however, you should remember that they have an inherent market risk associated with them. Risks are unavoidable, because we are dealing with projected values in the future, and the future always remains uncertain. Understanding the risks can help you take action to control and manage them. Your expectations can then be raised or lowered to do justice to the risks you have taken.
If you liked what you read and would like to explore the Multicap fund domain to grow your wealth, do register at MoneyWorks4me.com. By registering you can avail amazing FREE features that will enable you to invest in Stocks and Mutual Funds the right way.
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Every fund is assessed on the following:
  1. Consistent Outperformers : Track record of having generated returns above a benchmark on a 3-year rolling basis. Consistent performers are Green, followed by Orange. Red have an inconsistent track record on outperforming the index.
  2. The average 3-year rolling returns number appears in the first button.
  3. Quality of Portfolio is assessed based on the quality of each stock held. Predominantly high quality stocks get a Green second button, followed by Orange and Red (large amount of risky stocks).
  4. Upside Potential: Every fund is assessed on what returns it could deliver in the next 5 years based on it.
Select the fund that is Green on Performance which shows it has consistently outperformed the index. Select one with a high average 3-year rolling returns - the number in the first button. And select one with a Green rating on Quality-the second button.
Use the Funds Screener and select the category. It shows the funds with Green on Performance and Quality right on the top. The ones with the higher average 3-year rolling returns are ranked the highest. Funds with less than 5 years returns history are colored Grey on Performance. Since the track record is not for an adequately long period they feature lower in the list.
Build a well-diversified portfolio with funds that assures you of a stable growth through market and economic cycles and funds that enhance your portfolio returns over the long run.
  1. Core Funds: Choose from Large cap, Large and Mid cap and Flexicap funds.
  2. Booster Funds
    1. Choose from Mid and Small cap funds.
    2. Select a Sector or Thematic Fund that is likely to outperform in the long term.
Use the Fund Portfolio Analyzer, Sher-ya-Billi to check if your portfolio will deliver healthy returns or disappoint you. Go to Fund Portfolio Analyzer. You can also upload details of your funds in the Portfolio Manager and see the report on this page.
When adding a new fund check how different is the fund compared to your portfolio by using the link in the Right allocation box on the Fund Decision Maker.
Most investors have more, many more funds that they should-over diversified. This tends to reduce returns. Many investors have more of the same i.e. they have funds that have very similar portfolios and hence the fund portfolio is not well-diversified. Either there are too many large cap dominated funds or far too many mid and small cap funds. What you require is a good, balanced mix. Finally investors don't know when to exit a fund and end up carrying it even though the future upside potential is very low.
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