Are you looking for a mutual fund that can help you grow your wealth over the long term? If so, you may want to consider a multi-cap fund.

Multi-cap funds are a type of equity mutual fund that invests in a variety of companies, from large-cap to small-cap. This gives you the potential to benefit from the growth of all sizes of companies, regardless of the market conditions. Multi-cap funds are a good option for investors who are looking for a balanced portfolio with the potential for growth. They are also a good option for investors who are not sure what size of companies they want to invest in.

In this blog, we will discuss everything you need to know about multi-cap mutual funds, including how they work, how to choose a fund and the risks involved. So, hold on till the end and find out our hand-picked suggestions for you!!
 

What are Multi-Cap Mutual Funds? 

Multi-cap mutual funds are mutual funds that invest in stocks of companies of different market capitalizations. These funds invest in companies of all sizes, including large-cap, mid-cap, and small-cap companies. The fund manager has the flexibility to invest in companies of any size, depending on the market conditions. Multi-cap mutual funds are suitable for investors who want to invest in a diversified portfolio of stocks. These funds offer exposure to companies of different sizes, which helps in reducing the risk associated with investing in a single company or sector. 
 

Benefits of Investing in Multi-Cap Mutual Funds 

• Diversification: Multi-cap mutual funds offer diversification across different market capitalizations, sectors, and companies. This helps in reducing the risk associated with investing in a single company or sector. 
• Flexibility: Multi-cap mutual funds offer flexibility to the fund manager to invest in companies of any size, depending on the market conditions. This helps in taking advantage of the opportunities available in the market. 
• Potential for Higher Returns: Multi-cap mutual funds offer the potential for higher returns as they invest in companies of different sizes. Small-cap companies have the potential to grow faster than large-cap companies, which can result in higher returns. 
• Professional Management: Multi-cap mutual funds are managed by professional fund managers who have the expertise and experience to manage the portfolio effectively. They analyze market conditions and invest in companies that have the potential to generate good returns. 

How to Invest in Multi-Cap Mutual Funds? 

• Choose a Fund: The first step in investing in multi-cap mutual funds is to choose a fund that suits your investment goals and risk appetite. You can choose from a wide range of multi-cap mutual funds offered by different fund houses. 
• KYC Compliance: To invest in mutual funds, you need to be KYC compliant. You can complete the KYC process by submitting the required documents to the fund house or through a KYC registration agency. 
• Invest Online: You can invest in multi-cap mutual funds online through the fund house's website or through a mutual fund distributor's website. You can also invest through mobile apps offered by fund houses or distributors. 
• SIP or Lumpsum: You can invest in multi-cap mutual funds through SIP (Systematic Investment Plan) or lumpsum. SIP allows you to invest a fixed amount at regular intervals, while lumpsum allows you to invest a lump sum amount at once. 

How to choose the right multi-cap mutual fund?

Choosing the right multi-cap mutual fund can be a daunting task, but there are several factors you should consider before making your investment:

• Performance: Look for multi-cap mutual funds that have a consistent track record of generating high returns.
• Expense ratio: The expense ratio of a mutual fund can significantly impact your returns, so look for funds with a low expense ratio.
• Portfolio: Check the portfolio of the mutual fund to ensure that it aligns with your investment goals and risk appetite.
• Fund manager: The fund manager plays a crucial role in the performance of the mutual fund, so look for funds managed by experienced and skilled fund managers.

Tax implications of investing in multi-cap mutual funds

Investing in multi-cap mutual funds has tax implications, including:

• Long-term capital gains tax: If you hold your multi-cap mutual fund units for more than one year, you will be subject to long-term capital gains tax of 10% on gains above Rs. 1 lakh.
• Dividend distribution tax: If you receive dividends from your multi-cap mutual fund, you will be subject to a dividend distribution tax of 10%.

Top Multi-Cap Mutual Funds in India 

• Nippon India Multi Cap Fund: 

Nippon India Multi Cap Fund is an equity fund that invests in stocks of all sizes. The fund aims to generate capital appreciation and long-term growth for investors. This fund is managed by Mr. Sailesh Raj Bhan and Mr. Ashutosh Bhargava with an asset value of ₹16,189.62 crores. The fund has annualized return values of 37.80% for 3 years and 17.49% since inception with a very high risk.
 

• Axis-Focused 25 Fund: 

Axis Focused 25 Fund is an open-ended equity scheme investing in maximum 25 stocks investing in large-cap, mid-cap, and small-cap companies. This fund is managed by Mr.  Jinesh Gopani and Mr. Vinayak Jayanath with an asset value of ₹15,892.47 crores. The fund has annualized return values of 15.82% for 3 years and 13.91% since inception with a very high risk.
 

• ICICI Prudential Multicap Fund: 

ICICI Prudential Multicap Fund invests in stocks of all sizes. The fund aims to generate capital appreciation for investors. This fund is managed by Mr. Anand Sharma and Mr. Sankaran Naren with an asset value of ₹7972.04 crores. The fund has annualized return values of 27.70% for 3 years and 14.77% since inception with a very high risk.
 

• SBI Multicap Fund: 

SBI Multicap fund is an open-ended equity scheme investing across large-cap, mid-cap, and small-cap stocks. This fund is managed by Mr. R Srinivasan and Mr. Mohit Jain with an asset value of ₹12511.15  crores. The fund has annualized return values of 10.25% since inception with a very high risk.

• Kotal Multicap Fund: 

Kotak Multicap Fund is an open-ended equity scheme investing across large-cap, mid-cap, and small-cap stocks. This fund is managed by Mr. Harsha Upadhyaya, Mr. Abhishek Bisen, and Mr. Devender Singhal with an asset value of ₹ 5017 crores. The fund has annualized return values of 29.19% for a year and 11.22% since inception with a very high risk.

Conclusion 

Multi-cap mutual funds are a great way to diversify your portfolio and earn good returns. These funds offer exposure to companies of different sizes, which helps in reducing the risk associated with investing in a single company or sector. Before investing in multi-cap mutual funds, it is important to choose a fund that suits your investment goals and risk appetite. You can invest in these funds online through the fund house's website or through a mutual fund distributor's website. Always remember to do your research and consult a financial advisor before investing in mutual funds.