Top 5 best-performing multi-cap mutual funds; Are they worth investing in?
This article explains how multi-cap funds differ from popular large-cap options and the top 5 best performers in the multi-cap category.
Investing can be overwhelming, especially for beginners. When exploring mutual funds, terms like 'multi-cap' might raise confusion. But worry not! This article explains how multi-cap funds differ from popular Large-Cap options and the top 5 best performers in the multi-cap category.
Multi-Cap: Spreading Your Wings Across Companies of All Sizes
Unlike large-cap funds, which focus solely on established giants, multi-cap funds spread their wings across large, mid, and Small-Cap companies. This diversification brings several advantages:
- Balanced Risk: By investing in companies of various sizes, multi-cap funds offer a balance between potential returns and lower risk compared to focusing solely on smaller, potentially volatile companies.
- Growth Potential: While large-cap companies offer stability, mid and small-cap companies have the potential for higher growth, which multi-cap funds tap into.
- Adaptability: Market conditions change. Multi-cap funds allow fund managers to adjust their allocations between large, mid, and small-cap companies based on market trends, potentially enhancing returns.
Top 5 best-performing muti-cap funds
|
Scheme Name
|
Fund Size (Cr)
|
3-year
Returns (p.a)
|
|
Nippon India Multi Cap Fund
|
25,723
|
30.70%
|
|
Mahindra Manulife Multi Cap Fund
|
2,936
|
28.35%
|
|
Quant Active Fund
|
8,143
|
27.01%
|
|
ICICI Prudential Multicap Fund
|
10,775
|
26.39%
|
|
Invesco India Multicap Fund
|
3,132
|
22.67%
|
*Funds are sorted by their 3-year returns. Data as of Feb 14.
Understanding Multi-Cap Fund Types
While all multi-cap funds offer diversification, some have specific preferences:
- Large-Cap Focused: These prioritize established companies but explore mid and small-cap opportunities for additional growth.
- Mid/Small-Cap Focused: These primarily target mid and small-cap companies for higher potential returns, but invest in large-cap stocks for stability.
- No Specific Focus: These seek promising companies across all market capitalizations, aiming for overall outperformance.
How do multi-cap funds work
Like other equity funds, multi-cap funds collect money from investors and invest it in stocks. However, unlike funds restricted to specific market caps, multi-cap funds have more flexibility:
- Large-cap funds: Invest in the top 100 companies by market capitalisation.
- Small-cap funds: Invest in companies ranked below 250.
- Multi-cap funds: Invest in any combination of large, mid, and small-cap companies, with minimum allocations (as per SEBI) of 25% each.
Key Features of Multi-Cap Funds
- Diversification: Spreads risk and tap into various growth potentials.
- Risk-Return Balance: Offers moderate risk with the potential for higher returns than large-cap funds.
- Flexibility: Adapts to market conditions for potentially better returns.
Remember: Choosing the right fund depends on your risk tolerance and investment goals. Consult a financial advisor for personalised guidance.