Top 5 MultiCap Funds for Long Term

Investing in multi-cap mutual funds is a great way to diversify your portfolio and aim for long-term growth. Multi-cap funds invest in companies of different sizes—large, mid, and small caps—which helps balance risk and reward. These funds deliver fund managers the flexibility to shift investments according to market conditions, making them an attractive choice for various investors. To know more about the best multicap funds for the long term, read on to:

What are Multicap Mutual Funds?

Multicap mutual funds invests in companies of different market sizes: large, mid, and small. Unlike other funds focusing only on one market segment, multicap funds spread their investments across all three, providing diversification. This mix helps balance risk and returns since large-cap companies offer stability, mid-cap companies offer growth potential, and small-cap companies can provide high returns but come with higher risks. 

Multicap funds are managed by professional fund managers who adjust the fund’s portfolio based on market conditions, which helps optimise returns.

Top 5 Multicap Funds for Long Term

Below are the top 5 multicap funds for long term:

Overview of Best Multicap Mutual Fund

Axis Multicap Fund:
Axis Multicap Fund is a top performer with a 59.45% return, driven by a balanced portfolio across large, mid, and small caps. Its strategic sector allocation and active management have made it a preferred choice for investors seeking stability and growth.

LIC MF Multicap Fund:
LIC MF Multicap Fund closely follows with a 58.87% return, leveraging a diversified strategy across various sectors and market sizes. The fund’s active approach balances risk and capital appreciation by investing in stable large caps and growth-oriented mid and small caps.

Invesco India Multicap Fund:
Invesco India Multicap Fund delivers 58.59% returns. It focuses on high-growth mid-cap and small-cap stocks while maintaining large-cap stability. Its dynamic asset allocation captures emerging sector opportunities.

Bank of India Flexi Cap Fund:
Operating like a multi-cap fund, this fund’s flexible strategy adapts to market changes. It offers a balanced mix of growth and risk management and a 54.0% return.

ICICI Prudential Retirement Fund:
Aimed at long-term growth, this fund provides a solid 49.8% return through a diversified portfolio of large and mid-caps, suitable for investors seeking steady appreciation.

Advantages of Multi-Cap Mutual Fund

Multi-cap mutual funds are invested across different sectors in small, medium, and large companies. This ensures that invested money spreads across companies based on size and industries. There are some major advantages:

Risk Minimisation Through Diversification: Blending various sectors caps downsides if some sectors underperform.

Liquidity: Encashing multi-cap fund units is easy and quick, as money is sent directly to the linked bank account within a day.

Flexible Investment Facility: One can instantly start investing in multi-cap funds through lump sum mode or periodically via SIPs.

Dynamic Portfolio Management: Fund managers continuously modify allocations across large, mid, and small caps to tap opportunities and maximise returns.

Disadvantage of Multi-Cap Mutual Fund

Some of the disadvantages of the best multicap fund are as follows:

Market Risk: Like all equity funds, multi-cap funds are subject to market risks, and their performance varies with market conditions.

Higher Expense Ratio: Due to active management and diversified portfolios, these funds can have higher expense ratios than index funds.

Volatility: Mid and small-cap stocks can be highly volatile, leading to fluctuations in fund performance during unstable market periods.

Who Should Invest in the Best Multi-Cap Fund?

Multi-cap mutual funds allocate money across small, medium and large-sized companies from different sectors. This balanced investment approach makes them suitable for:

First-Time Equity Investors: For those new to equity investments, multi-cap funds limit risks through diversification across market caps and sectors - making them ideal starter funds.

Seeking a Balance: These funds appeal to investors who are hesitant about investing solely in mid/small caps despite their high growth potential or who are unable to decide between market caps. Multi-caps strike the right equilibrium.

Long-Term Financial Goals: The long-term compounding potential makes multi-cap funds work well for 5-10 year goals like retirement planning, where interim volatility gets negated eventually.

Principal Protection: Risk-averse investors get exposure to high-growth small/mid-cap shares through large cap cushioning - thereby enjoying upside potential with lower loss likelihood.