Best Multi Cap Funds for Long Term: HDFC, Nippon India and More

Multi cap funds can be your perfect investing choice if you are looking to invest in stocks of different market caps at the same time. But while googling through the list of multi cap funds, you will find various types of funds such as HDFC Multi Cap Fund​, Nippon India Multi Cap Fund​, etc. and it can be difficult to select the one. In the blog, we’ll know in detail about what are multi cap funds and the 10 top Multicap funds to invest in 2024.

What is Multi Cap Fund​?

Multi cap mutual fund is a type of equity fund that keeps its exposure of at least 75% in equities (or related securities). These mutual funds offer in-built diversification while investing across large-cap, mid-cap, and small-cap stocks.

Large-cap stocks are the top 100 traded companies in India in terms of full market cap and have a stable business model and hold comparatively low risk. Mid-cap stocks rank between 101 to 250 (in terms of full market cap) and hold great potential to grow. Small-cap stocks rank below 251 and have huge risks but with high return possibilities.

Multi cap funds have to invest at least 25% of their overall corpus in each of the large-cap stocks, mid-cap stocks, and small-cap stocks. Within a single fund, you get a full basket of stocks of different sizes having varied risk levels, growth potentials, and sectoral exposure.

10 Top Multicap Funds for Long Term Investment

Here is the list of the 10 best multi cap mutual funds (Direct-Growth) to invest in 2024:

Multi Cap Fund Name	Benchmark	Fund Size (in ₹ crores)	1-Year Returns	5-Year Returns		Expense Ratio
			Fund	Benchmark	Fund	Category Avg	Fund
HDFC Multi Cap Fund	Nifty 500 Multicap 50:25:25 TRI	₹16,733.48	36.93%	23.46%	–	0.62%	0.59%
Nippon India Multi Cap Fund	Nifty 500 Multicap 50:25:25 TRI	₹38,677.71	40.03%	23.46%	26.02%	0.62%	0.73%
Kotak Multi Cap Fund	Nifty 500 Multicap 50:25:25 TRI	₹14,799.29	45.83%	23.46%	–	0.62%	0.38%
Tata AIA Multicap Fund	Nifty 500 Multicap 50:25:25 TRI	₹3,218.66	25.96%	23.46%	–	0.62%	0.36%
SBI Multi Cap Fund	Nifty 500 Multicap 50:25:25 TRI	₹18,603.41	36.09%	23.46%	–	0.62%	0.88%
ICICI Multicap Fund	Nifty 500 Multicap 50:25:25 TRI	₹14,690.79	40.14%	23.46%	22.76%	0.62%	0.93%
Quant Active Fund	Nifty 500 Multicap 50:25:25 TRI	₹11,229.42	31.46%	23.46%	29.83%	0.62%	0.58%
Mahindra Manulife Multi Cap Fund	Nifty 500 Multicap 50:25:25 TRI	₹4,734.88	38.94%	23.46%	26.84%	0.62%	0.41%
Baroda BNP Paribas Multi Cap Fund	Nifty 500 Multicap 50:25:25 TRI	₹2,810.73	43.96%	23.46%	24.78%	0.62%	0.93%
Invesco India Multicap Fund	Nifty 500 Multicap 50:25:25 TRI	₹3,961.65	40.52%	23.46%	24.38%	0.62%	0.66%

*(Data as on November 8, 2024)

Overview of the 10 Top Multicap Funds

Here are the details of the 10 best multi cap funds (as on November 8, 2024):

1. HDFC Multi Cap Fund

HDFC Multi Cap Fund has generated 25.54% annualized returns since its inception. The minimum SIP amount is ₹100 while the lump sum investment is ₹100.

By investing ₹1,000 every month through SIP for 1 year, your total investment amount of ₹12,000 in HDFC Multi Cap Fund would become approx ₹14,700.

2. Nippon India Multi Cap Fund

Nippon India Multi Cap Fund has generated 17.95% annualized returns since its inception. The minimum SIP amount is ₹100 while the lump sum investment is ₹100. Its alpha is 10.73 and its beta is 0.89.

By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Nippon India Multi Cap Fund would become more than ₹1.20 lakhs.

3. Kotak Multi Cap Fund

Kotak Multi Cap Fund has generated 24.44% annualized returns since its inception. The minimum SIP amount is ₹100 while the lump sum investment is ₹100. Its alpha is 8.25 and its beta is 1.04.

By investing ₹1,000 every month through SIP for 1 year, your total investment amount of ₹12,000 in Kotak Multi Cap Fund would become around ₹15,000.

4. Tata AIA Multicap Fund

Tata AIA Multicap Fund has generated 25.91% annualized returns since its inception. The minimum SIP amount is ₹150 while the lump sum investment is ₹5,000.

By investing ₹1,000 every month through SIP for 1 year, your total investment amount of ₹12,000 in Tata AIA Multicap Fund would become approx ₹13,800.

5. SBI Multi Cap Fund

SBI Multi Cap Fund Direct Growth has generated 21.13% annualized returns since its inception. The minimum SIP amount is ₹500 while the lump sum investment is ₹5,000.

By investing ₹1,000 every month through SIP for 1 year, your total investment amount of ₹12,000 in SBI Multi Cap Fund Direct Growth would become approx ₹14,600.

6. ICICI Multicap Fund

ICICI Multicap Fund has generated 17.86% annualized returns since its inception. The minimum SIP amount is ₹100 while the lump sum investment is ₹5,000. Its alpha is 5.51 and its beta is 0.92.

By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in ICICI Multicap Fund would become more than ₹1.12 lakhs.

7. Quant Active Fund

Quant Active Fund has generated 21.10% annualized returns since its inception. The minimum SIP amount is ₹1,000 while the lump sum investment is ₹5,000. Its alpha is 2.79 and its beta is 1.08.

By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Quant Active Fund would become more than ₹1.38 lakhs.

8. Mahindra Manulife Multi Cap Fund

Mahindra Manulife Multi Cap Fund has generated 20.21% annualized returns since its inception. The minimum SIP amount is ₹500 while the lump sum investment is ₹1,000. Its alpha is 4.07 and its beta is 1.

By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Mahindra Manulife Multi Cap Fund would grow to ₹1.26 lakhs.

9. Baroda BNP Paribas Multi Cap Fund

Baroda BNP Paribas Multi Cap Fund has generated 17.56% annualized returns since its inception. The minimum SIP amount is ₹500 while the lump sum investment is ₹5,000. Its alpha is 4.22 and its beta is 0.91.

By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Baroda BNP Paribas Multi Cap Fund would grow to approx ₹1.16 lakhs.

10. Invesco India Multicap Fund

Invesco India Multicap Fund has generated 19.97% annualized returns since its inception. The minimum SIP amount is ₹500 while the lump sum investment is ₹1,000. Its alpha is 3.82 and its beta is 0.92.

By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Invesco India Multicap Fund would become more than ₹1.17 lakhs.

Pros of Multi Cap Mutual Fund

Investing in multi cap mutual funds provides several benefits which are as follows:

1. Diversification at its Peak

Multi cap funds perfectly suit the saying “Do not put all your eggs in one basket.” The fund manager strategically invests all the collected money into the large-cap, mid-cap, and small-cap stocks.

Not just the size of stocks, these funds are free to invest across sectors and industries such as financial services, IT, healthcare, etc. This reduces the sector-specific risk and investors can get exposure to different sectors in a single fund.

2. Good for Newbie Investors

Multi cap funds are good for investors who are just entering into the investing world and are not sure where to invest. These funds are managed by professional fund managers and they will invest in different stocks across multiple sectors. The investor, on the other hand, is free from analyzing stocks and keeping an eye on individual stocks’ performance.

3. Ideal for Long Term Investment

Multi cap funds come in the horizon of equity funds and they are ideal for investors who have long-term investment objectives such as retirement, buying a car, and child education. These funds are best for people looking to invest for 5 to 7 years.

4. Adaptable to Market

The adaptability to market conditions is one of the key benefits of multi cap funds. In the bull run, the mid-cap and small-cap stocks can provide substantial returns while in the downturn, large-cap stocks can safeguard your investment. The fund manager continuously changes the portfolio allocation to capitalize on the current market scenario and try to generate alpha-based returns.

5. Low Cost Investing

When you look to invest in individual stocks of different stocks, the investing cost can be huge. In this arena, multi cap funds work best as with one unit of a fund, you get the full basket of different sizes of stocks. Multi cap funds surely withstand the lower cost of investing with less stress of analyzing individual stocks.

Cons of Multi Cap Mutual Fund

After learning what is a multi cap mutual fund and its benefits, let’s know the disadvantages as well:

1. Less Flexibility

With the SEBI rule of at least 25% in each type of stock (large-cap to small-cap stocks), multi cap funds cannot fully invest towards say small-cap stocks to capitalize on the current market benefit. This limits the fund manager’s take on his investing horizon.

2. High Risk

While multi cap funds have a pure play diversification benefit, it can’t be forgotten that these funds carry risk. With at least a total of 50% strict investment rule to invest in mid-cap and small-cap stocks, these funds are exposed to high risk.

3. Volatility

Multi cap mutual funds are one of the types of equity funds whose performance is highly dependent on the stock market performance. As the equities returns are highly fluctuating in nature, these funds are also susceptible to high volatility and have to bear the market brunt.

Conclusion

The answer to the question what are multi cap funds entail in its name. These funds allow you to invest across market caps and sectors potentially generating market-based returns with professional management. These equity funds have generated an average return of 24.5% in the last five years with few funds beating this average.

But while investing in mutual fund, it is better to do your research and keep your investment objective in mind. Open Demat account with SMC Global Securities and keep investing in stocks, or mutual funds like a pro.

FAQs

1. Is HDFC Multi Cap Fund a good investment?

HDFC Multi Cap Fund is a good investment as it has generated a return of 36.93% in the last 1 year by beating the category average returns of 38.55%

2. Is the Nippon India Multi Cap Fund good?

Nippon India Multi Cap Fund is a good multi cap fund as it has generated a return of 40.03% in the last 1 year more than the category returns of 38.55%.

3. Is Kotak Multi Cap Fund good?

Kotak Multi Cap Fund has generated returns of 45.83% in the last 1 year while its expense ratio is only 0.38% making it a good fund to invest in.

References:
https://www.smctradeonline.com/invest/mutual-funds                            https://www.mutualfundssahihai.com/en/what-are-multi-cap-funds
https://www.amfiindia.com/investor-corner/knowledge-center/SEBI-categorization-of-mutual-fund-schemes.html

Author: All Content is verified by SMC Global Securities.