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Multi Cap Mutual Funds

Q: Which are the best Multi Cap Mutual Funds to invest in 2023?

These are top 5 Multi Cap funds you can invest in 2023 Fund Name Fund Category ETM Rank Consistency 5 Year Return Franklin India Multi Cap Fund Equity 0 NA Bandhan Multi Cap Fund Equity 0 NA DSP Multicap Fund Equity 0 NA HSBC Multi Cap Fund Equity 0 NA Union Multicap Fund Equity 0 NA

Average Return 19.7%
No. of Funds 22

How do Multi-Cap Funds Work?
Who Should Invest in multi Cap Funds?
Taxation on multi Cap Funds
How to invest in Multi Cap Funds?
Frequently Asked Questions

How do Multi-Cap Funds Work?

Every equity mutual fund invests the money gathered by all the investors in the stocks of companies.

According to regulations, mutual funds need to be specific in their investment approach. For example, a large cap fund can only invest in the stocks of the top 100 companies based on market capitalization. Similarly, small cap funds can invest in companies that are ranked below 250, and so on.

However, multi cap is the only category that doesn't have a defined structure by regulation on which size and sector of companies it can invest. And hence, these funds invest in large cap, mid cap, and small cap stocks. Now the proportion of these stocks could vary. It depends on the fund manager. They look at the market conditions and accordingly adjust the proportion of large cap, mid cap, and small cap stocks in the portfolio of a multi cap mutual fund.

When the economy is expanding, the fund manager can go for a higher exposure in mid cap and small cap stocks to take advantage of their fast growth. On the other hand, when the economy is in a slowdown, they might take a higher exposure in large cap stocks.

Who Should Invest in multi Cap Funds?

First Time Investors: multi cap funds due to their diversified portfolio are ideal for first-time equity investors as it keeps the risk in control. Also, since these investors might not be aware of the risks that come with investing in companies of a specific size, a multi cap fund is the best bet for them
Investors in a dilemma: A lot of investors get confused about whether they should go for funds that invest in big companies for their relative stability or go for mid and small caps, which can give high growth but come with risk. multi cap funds solve that problem.
Investors with a Long Term Investment Horizon: While investing in any equity funds, the investment horizon should be a long one. So if you are an investor who has a long-term financial goal in mind like early retirement, children's education, building a house, etc., investment in a multi cap fund can help fulfill your goals. An investment horizon of more than 5 years is required while investing in these funds. A long horizon acts as a cushion against the volatility of equity markets and also helps you reap the benefits of compounding.
Investors who want exposure to mid and small caps without taking too much risk: Some investors don't want to miss the growth opportunities that mid cap and small cap funds offer, but they also don't want to take the risk or are not comfortable with the volatility they might see if they invest in fund investing only in small or mid caps

Taxation on multi Cap Funds

It's the post-tax returns that matter. To determine that, you should be familiar with how multi cap funds are taxed. The capital gains made as a result of selling your multi cap fund are taxed depending on how long the investment was held by you.

Short Term Capital Gain Tax (STCG): If you sell your investments within 1 year, the gains are classified as Short Term Capital Gain (STCG), and you need to pay 15% tax on them.
Long Term Capital Gain Tax (LTCG): Whereas any multi cap investment held for more than one year, the gains are classified as Long Term Capital Gain (LTCG). Gains of up to 1 lakh in a financial year are tax free. Beyond 1 lakh, the gains are taxed at a rate of 10%.

How to invest in Multi Cap Funds?

Investing in Multi Cap mutual funds on the ET Money app is simple. Follow these steps:

For Desktop Users:

Click on the "Invest" button next to the scheme in the Multi Cap fund list shown above.
Scan the QR code to download the app.

For Mobile Users:

Tap on the "Invest" button in the Multi Cap fund list to download the app.
Open the app, sign up, and complete your one-time KYC process, or log in if you're already registered.
Search for the mutual fund you want to invest in and choose your investment mode (Lump sum investment or SIP).
Enter your investment amount.
Fill in the required details, including your bank account for payment, and confirm.

All set! Your investment is complete.

Frequently Asked Questions

Which are the best Multi Cap Mutual Funds to invest in 2025?

These are top 5 Multi Cap funds you can invest in 2025

Fund Name	Fund Category	ETM Rank	1.0 Year Return (Annualized)
Franklin India Multi Cap Fund	Equity	Unranked	7.56 % p.a.
Bandhan Multi Cap Fund	Equity	Unranked	4.57 % p.a.
DSP Multicap Fund	Equity	Unranked	2.56 % p.a.
HSBC Multi Cap Fund	Equity	Unranked	5.76 % p.a.
Union Multicap Fund	Equity	Unranked	5.29 % p.a.

How long should I stay invested in Multi Cap Mutual Funds?

Since Multi Cap Funds are equity funds i.e. they invest in stocks of companies, you need to stay invested for at least 5 years.

Where do Multi Cap Mutual Funds invest?

Multi Cap Funds have to invest at least 65% of their money in stocks. That is the long regulation they need to follow when it comes to how and where they can invest. This means they can make a portfolio of any mix of sectors and company sizes. This mix is decided by the fund manager, and they also keep changing it depending on the market conditions.

Are Multi Cap Mutual Funds high risk?

Multi Cap Mutual Funds invest in equities, so in a short term, they can be volatile. However, over a long-term, the risk comes down substantially.

What kind of returns can I earn from Multi Cap ?

Multi Cap Funds have on an average delivered 24.88% p.a. returns in the last 5 years. Their 3 and 10 year annualized returns are 19.7% and 15.11% p.a.

Should I invest in Multi Cap Mutual Funds?

Flexi Cap Funds have a go-anywhere approach. This approach has two benefits. One, they can pick up any company from any sector, giving you the best of what the markets have to offer. Second, this mix of sectors and stocks can be changed to whatever fund manager feels is best for given market conditions. So you get a portfolio that is optimized. Apart from these two benefits, you also have a diversified portfolio, which reduces risk. For all these reasons, Flexi Cap Fund should be a holding in every investor's portfolio.