The new or unique investor count has increased by 20% to achieve the 54 million mark in 2025. This implies that not only the number of mutual fund investors but also the rate of new investor addition is growing. A key element of investing that often perplexes new investors is diversification. Not just restricted experience, but limited funds and other roadblocks also hinder optimal allocation and diversification of funds.
In such a scenario, an investment medium like multicap mutual funds can aid diversification and propel portfolio growth. Therefore, this blog explores the top multicap funds in India.
Best Performing Multi-Cap Mutual Funds in 2026
In 2026, multi-cap mutual funds are expected to continue their popularity due to their diversification across large, mid, and small-cap stocks, offering balanced growth potential. The best-performing multi-cap funds generally combine the strengths of large-cap stability with the growth potential of mid and small-cap stocks. Here are some top performers:
- Nippon India Multi Cap Fund: A consistent performer, this fund has delivered strong returns by focusing on a diversified portfolio across all market caps. It aims for long-term growth and is known for its ability to adapt to market cycles.
- Mirae Asset India Equity Fund: A well-known fund, it combines large, mid, and small-cap stocks effectively, delivering impressive returns in both bullish and bearish market conditions. It focuses on growth stocks with strong fundamentals.
- Axis Multi Cap Fund: Known for its aggressive strategy, Axis Multi Cap Fund has outperformed many peers by focusing on companies with strong growth prospects across all market segments.
- Kotak Standard Multicap Fund: A solid performer, this fund is recognized for maintaining a good balance between risk and reward. It typically invests in high-growth sectors such as technology and consumer goods.
- ICICI Prudential Multi-Cap Fund: A diversified and well-balanced fund, it has a track record of performing well in both market upturns and downturns, with a focus on quality companies across various market caps.
Note: Always check the latest performance, as mutual fund returns can vary based on market conditions, and past performance does not guarantee future returns.
Factors to Consider Before Investing in Multi-Cap Mutual Funds
Before investing in multi-cap mutual funds, it’s essential to evaluate several factors to make an informed decision:
- Investment Objective : Ensure the fund aligns with your investment goals (growth, income, or a combination). Multi-cap funds are typically suitable for long-term capital growth.
- Risk Tolerance : Multi-cap funds invest across different market segments, which means higher volatility due to exposure to small and mid-caps. Consider your ability to handle short-term fluctuations in pursuit of long-term gains.
- Fund Manager’s Track Record: The experience and past performance of the fund manager are crucial. A seasoned manager with a good track record of making sound investment decisions is essential.
- Expense Ratio : Compare the expense ratio of different funds. A lower expense ratio means you’ll pay less in management fees, which can positively impact long-term returns.
- Asset Allocation: Review the fund’s allocation between large-cap, mid-cap, and small-cap stocks. A well-balanced fund ensures diversification and reduces risk.
- Past Performance: While past performance doesn’t guarantee future returns, historical consistency in delivering solid returns can be a good indicator of the fund’s potential.
- Tax Implications : Multi-cap funds are subject to capital gains tax. Long-term capital gains (LTCG) of over ₹1 lakh are taxed at 10%. Be mindful of the taxation structure based on your investment horizon.
- Fund Size: Large funds might be more stable, but smaller funds can be more nimble and potentially deliver higher returns. Consider your preference for fund size when making a decision.
- Performance during Market Cycles: Evaluate how the fund performed during different market conditions (bullish, bearish, or sideways). A fund that performs well in both up and down markets shows robust management.
Understanding multicap mutual funds
According to the product categorisation circular issued by SEBI in October 2017, mutual funds can be categorised into large-cap, mid-cap and small-cap funds based on the nature of company stocks held by them.
| Equity mutual fund | Nature of stock held (based on market capitalisation) |
| Large-cap funds | The top 100 publicly listed companies |
| Mid-cap funds | 101st to 250th listed companies |
| Small-cap funds | Companies from the 251st onwards |
Unlike large-cap, small-cap and mid-cap funds, multi-cap mutual funds can invest in equities across the spectrum. It implies that they can invest in companies of all sizes. However, there are certain criteria specified by SEBI for their asset allocation.
| Size category | Minimum allocation |
| Large-cap companies | At least 25% |
| Mid-cap companies | At least 25% |
| Small-cap companies | At least 25% |
| The remaining 25% can be invested in any instruments according to the discretion of the mutual fund house. | |
Mulitcap mutual funds offer diversification that can yield both stability and high returns. However, some factors must be considered before choosing the best multicap fund.
Factors to consider before investing in the best multicap fund
Choosing the best multi-cap mutual funds requires analysis of particular funds along with the consideration of some industry-specific and investor-specific factors.
- Category returns: The category average returns offered by the multi-cap mutual funds stand at 5.85%. The top category performer offered a return of 30.85%, whereas the poorest performer recorded a negative return. However, the category performance in the long term is more important than the short-term performance. Therefore, the table below shows the metrics for more intervals.
| Tenure (years) | Average (%) | Top performer (%) | Bottom performer (%) |
| 3 | 25.25 | 31.24 | 19.93 |
| 5 | 26.64 | 33.30 | 24.80 |
| 10 | 15.53 | 18.98 | 13.49 |
- Category risk: Since the multi-cap mutual fund invests across different sectors, the risk is diversified and targets minimisation. Therefore, discussed below are some category average risk meters. Comparison of individual risk metrics with fund-specific metrics can aid in optimal decision-making.
| Particulars | 3 years (%) | 5 years (%) | 10 years (%) | 15 years (%) |
| Standard deviation | 14.8195 | 22.9871 | 17.9731 | 18.1606 |
| Sharpe ratio | 0.9795 | 1.3115 | 0.5575 | 0.4950 |
| Sortino ratio | 1.6635 | 2.5973 | 0.8108 | 0.7344 |
- Nature of investors: While investment in midcap mutual funds is not restricted to any category of individual, certain investors, like beginners, benefit more accurately through this investment medium due to its diversified nature.
Along with these metrics, an analysis of individual mutual funds is important as well. Therefore, this blog explores the top 5 multicap funds for long term.
Top 5 multicap funds for long-term
Discussed below are the five multicap funds listed based on the assets under management (AUM) as of 27 April 2025.
| Particulars | Nippon India Multicap Direct Growth Fund | SBI Multicap Direct Growth Fund | Kotak Multicap Direct Growth Fund | HDFC Multicap Direct Growth Fund | ICICI Prudential Multicap Direct Growth Fund |
| AUM (₹ crores) | 43,483.13 | 20,558.87 | 17,943.32 | 17,620.15 | 15,094.86 |
| Risk (₹) | Very high | Vey high | Very high | Very high | Very high |
| Expense Ratio | 0.74 | 0.86 | 0.43 | 0.73 | 0.93 |
| PE Ratio | 30.38 | 27.56 | 15.49 | 24.38 | 22.75 |
| Sharpe Ratio | 1.37 | 0.92 | 1.24 | 1.22 | 1.24 |
| Standard Deviation | 14.43 | 13.51 | 16.15 | 15.13 | 13.42 |
| Sortino Ratio | 1.99 | 1.43 | 1.70 | 1.82 | 2.06 |
| 3-year return (%) | 31.15 | 23.33 | 30.97 | 29.50 | 26.94 |
Discussed below is a detailed analysis of the top multicap fund. It might aid optimal investor research before choosing a fund.
- Nippon India Multicap Direct Growth Fund: It has the largest AUM among the two 5 multicap funds for long-term growth. It also has the highest Sharpe ratio and 3-year returns, indicating strong performance and investor confidence comparatively. The high PE ratio suggests a tilt towards growth stocks, which can increase volatility but also drive higher returns.
- SBI Multicap Direct Growth Fund: SBI Multicap has the lowest Sharpe and Sortino ratios among the best multi-cap mutual funds, indicating less efficient risk-adjusted returns. Its standard deviation is also among the lowest, suggesting relatively lower volatility. Irrespective of low volatility, the 3-year return is the lowest in the group.
- Kotak Multicap Direct Growth Fund: This top multicap fund has the lowest PE ratio among its top 5 peers. The high standard deviation reflects high volatility but delivers optimum risk-adjusted returns, considering the optimum Sharpe and Sortino ratios, along with 3-year returns.
- HDFC Multicap Direct Growth Fund: It offers a moderate fund with moderate metrics. 97.7% of the portfolio is invested in equity, with 12.01% invested in small-cap. It is interesting because the asset allocation of the fund in the small-cap sector is higher than the industry average of 11.40%. However, asset allocation in all other sectors, namely large-cap, mid-cap, and giant-cap, is lower than the respective industry average.
- ICICI Prudential Multicap Direct Growth Fund: This fund has the highest expense ratio among its top peers. This can reduce the net returns that can be allocated to the investors. However, it has the highest Sortino ratio among its peers in this list. This indicates an optimum risk-adjusted return generation capacity.
It is necessary to consider the applicable taxation on the mutual fund category because it has an important bearing on the amount of gain an investor can generate from the fund.
Best multi-cap mutual funds: Taxability
The applicable tax rate on the multicap sector is discussed in this section.
| Particulars | Tax Rate (%) |
| Short-term capital gain on funds transferred before 23 July 2024 | 15 |
| Short-term capital gain on funds transferred on or after 23 July 2024 | 20 |
| Long-term capital gain on units transferred before 23 July 2024 | 10 |
| Long-term capital gain on units transferred on or after 23 July 2024 | 12.5 |
| Moreover, according to section 112A, long-term capital gain up to ₹1,25,000 is not taxable. | |
Bottomline
Multicap mutual funds might simplify diversified investing by allocating investor funds across companies of different capital structures. Not only do they allow risk mitigation through large-cap and giant-cap allocations, but they also aid portfolio growth through diversification into small-cap and mid-cap stocks. Understanding the portfolio allocation is important before investing. Moreover, along with fund-specific metrics, checking allocation distribution might aid investors in choosing a mutual fund that fits their investing objective and rationale.
FAQs
Multi-cap mutual funds are a subset of equity mutual funds that distribute assets among large-cap, mid-cap, and small-cap corporations. These funds invest in various market capitalisation categories, allowing the possibility of both capital appreciation and risk diversification, to strike a balance between stability and growth. However, an optimum analysis of mutual fund metrics is important before making any decision.
Multicap mutual funds diversify across equities of different capital structures. Therefore, even with limited funds, investors can diversify across various bands and mitigate risk. However, since the majority of the allocation is towards equity, it is a market-linked security. Plus, like any market-linked security, it is impacted by the volatility of the equity market and is not completely risk-free.
Investors should consider the category average metrics and compare them with the metrics recorded by the mutual fund. It can offer valuable insights into how the fund is performing compared to its peers and the category. Moreover, the asset allocation of the fund should also be noted. An investor should also consider their own financial goal and risk appetite before choosing an asset.
The top five multicap mutual funds based on their AUM are Nippon India Multicap Direct Growth Fund, SBI Multicap Direct Growth Fund, Kotak Multicap Direct Growth Fund, HDFC Multicap Direct Growth Fund, and ICICI Prudential Multicap Direct Growth Fund. However, only considering their AUM is not enough. Investors should also take into account other fund-specific metrics and compare them to the industry average to get a holistic view of the performance.
Long-term capital gain of up to ₹1,25,00 from multicap mutual funds is not taxable according to Section 112A of the Income Tax Act. However, STCG and LTCG (above the exemption limit) are taxable. If the LTCG or STCG occurs on or after 23 July 2024, a tax of 20% and 12.5% respectively, applies to them. Investment planning should be complemented with tax planning for optimum fiscal decision-making.
Mirae Asset India Equity Fund
Axis Multi Cap Fund
Nippon India Multi Cap Fund
These funds have a strong long-term track record and offer good diversification.
Multi-Cap: Predefined allocation across large, mid, and small caps.
Flexi-Cap: Flexible allocation, adapting to market conditions.
Flexi-Cap is better for flexibility, while Multi-Cap offers more stability.
Mirae Asset India Equity Fund
Axis Multi Cap Fund
ICICI Prudential Multi-Cap Fund
These are top performers with solid returns and diversification.
Investment Goal: Align with your financial goals.
Risk Profile: Match with your risk tolerance.
Expense Ratio: Opt for low-cost funds.
Fund Manager’s Track Record: Check their performance history.
Asset Allocation: Ensure a balanced approach.
