By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Investment SimplifiedInvestment Simplified
  • Tax
    • Popular Searches
    • What is Form 16?
    • Trademark Registration Fees
    • TDS Full Form
    • Ad Valorem Tax
    • How to Save Tax?
  • Aadhaar
    • Popular Searches
    • How to Book Aadhaar Card Appointment?
    • E-Aadhaar And It’s Benefits
    • What is a Masked Aadhaar?
    • ESign Aadhaar: A Complete Guide
    • Aadhaar Card Address Change
  • EPF
    • Popular Searches
    • EPFO Member Portal – Login, Registration
    • EPFO Establishment Search
    • Guide to Your EPFO Member Login
    • EPF Interest Rate
    • What Is UAN Activation?
  • PAN Card
    • Popular Searches
    • What is a PAN Card
    • NSDL PAN Card
    • UTI PAN
    • e-PAN Card
    • PAN Card Apply
  • Banking
    • Banks
      • Popular Searches
      • State Bank of India (SBI)
      • Bank of Baroda (BOB)
      • Canara Bank
      • Indian Bank
      • Bank of India (BOI)
    • Bank Timings
      • Popular Searches
      • Bank of Baroda Timings
      • IDBI Bank Timings
      • Union Bank Timings
      • Karnataka Bank Timings
      • Central Bank of India Timings
      • Canara Bank Timings
    • Mini Statement
      • Popular Searches
      • Axis Bank Mini Statement
      • HDFC Mini Statement
      • Bank of Baroda Mini Statement
      • Union Bank of India Mini Statement
      • SBI Mini Statement
    • Balance Enquiry
      • Popular Searches
      • Canara Bank Balance Enquiry by SMS, Missed Call, Netbanking
      • SBI Balance Enquiry
      • Union Bank of India Balance Enquiry Number
      • BOB Balance Enquiry
      • PNB Balance Check Number – Enquiry by SMS, Missed Call, Netbanking
    • NEFT
      • Popular Searches
      • HDFC NEFT
      • SBI NEFT
      • Axis Bank NEFT
      • ICICI Bank NEFT
      • Canara Bank NEFT
    • Net Banking
      • Popular Searches
      • HDFC Bank Net Banking
      • SBI Net Banking
      • ICICI Net Banking
      • Axis Bank Net Banking
      • IOB Net Banking
    • Customer Care
      • Popular Searches
      • Central Bank of India Customer Care Number
      • Bank of Baroda Customer Care – Missed Call and Toll Free Number
      • Bank of Maharashtra Customer Care
      • Punjab National Bank Customer Care Number – PNB Grievance Redressal
      • IOB Customer Care Number
    • UPI
      • Popular Searches
      • BHIM
      • Google Pay
      • BHIM SBI Pay
      • Union Bank UPI
      • HDFC UPI
    • Debit Card
      • Popular Searches
      • SBI Debit Card
      • HDFC Debit Card
      • PNB Debit Card
      • Axis Bank Debit Card
      • Kotak Debit Card
    • RTGS
      • Popular Searches
      • RTGS Process
      • SBI RTGS
      • ICICI Bank RTGS Form
      • Axis Bank RTGS Form
      • HDFC RTGS Form
    • IMPS
      • Popular Searches
      • IMPS Limit
      • IMPS vs. NEFT
      • IMPS vs. NEFT vs. RTGS
      • MMID
    • Cheque
      • Popular Searches
      • Types of Cheques
      • Blank Cheque
      • Cancelled Cheque – How to Write a Cancelled Cheque?
      • Account Payee Cheque
      • Banker’s Cheque
    • Bank Holidays
      • Popular Searches
      • Bank Holidays in June 2023
      • Bank Holidays in July 2023
      • Bank Holidays in August 2023
      • Bank Holidays in September 2023
      • Bank Holidays in October 2023
    • Mobile Banking
      • Popular Searches
      • SBI Mobile Banking
      • HDFC Mobile Banking
      • Bank of Baroda Mobile Banking
      • Indian Bank Mobile Banking
      • Canara Bank Mobile Banking
    • Passbook
      • Popular Searches
      • SBI Passbook
      • Union Bank Passbook
      • BOB Passbook
      • HDFC Passbook
      • Axis Bank Passbook
    • Demand Draft
      • Popular Searches
      • Demand Draft Validity
      • Demand Draft Form
  • Savings Account
    • Popular Searches
    • What is a savings account
    • SBI Savings Account
    • Bank of Baroda Saving Account
    • Bank of Maharashtra Saving Account
    • Central Bank of India Saving Account
  • Insurance
    • General Insurance
    • Car Insurance
    • Travel Insurance
    • Pension & Retirement
  • About Us
  • Contact
Reading: Multicap Funds: Definition, Features, Benefits & Risks
Share
Investment SimplifiedInvestment Simplified
Search
  • Tax
    • Popular Searches
    • What is Form 16?
    • Trademark Registration Fees
    • TDS Full Form
    • Ad Valorem Tax
    • How to Save Tax?
  • Aadhaar
    • Popular Searches
    • How to Book Aadhaar Card Appointment?
    • E-Aadhaar And It’s Benefits
    • What is a Masked Aadhaar?
    • ESign Aadhaar: A Complete Guide
    • Aadhaar Card Address Change
  • EPF
    • Popular Searches
    • EPFO Member Portal – Login, Registration
    • EPFO Establishment Search
    • Guide to Your EPFO Member Login
    • EPF Interest Rate
    • What Is UAN Activation?
  • PAN Card
    • Popular Searches
    • What is a PAN Card
    • NSDL PAN Card
    • UTI PAN
    • e-PAN Card
    • PAN Card Apply
  • Banking
    • Banks
      • Popular Searches
      • State Bank of India (SBI)
      • Bank of Baroda (BOB)
      • Canara Bank
      • Indian Bank
      • Bank of India (BOI)
    • Bank Timings
      • Popular Searches
      • Bank of Baroda Timings
      • IDBI Bank Timings
      • Union Bank Timings
      • Karnataka Bank Timings
      • Central Bank of India Timings
      • Canara Bank Timings
    • Mini Statement
      • Popular Searches
      • Axis Bank Mini Statement
      • HDFC Mini Statement
      • Bank of Baroda Mini Statement
      • Union Bank of India Mini Statement
      • SBI Mini Statement
    • Balance Enquiry
      • Popular Searches
      • Canara Bank Balance Enquiry by SMS, Missed Call, Netbanking
      • SBI Balance Enquiry
      • Union Bank of India Balance Enquiry Number
      • BOB Balance Enquiry
      • PNB Balance Check Number – Enquiry by SMS, Missed Call, Netbanking
    • NEFT
      • Popular Searches
      • HDFC NEFT
      • SBI NEFT
      • Axis Bank NEFT
      • ICICI Bank NEFT
      • Canara Bank NEFT
    • Net Banking
      • Popular Searches
      • HDFC Bank Net Banking
      • SBI Net Banking
      • ICICI Net Banking
      • Axis Bank Net Banking
      • IOB Net Banking
    • Customer Care
      • Popular Searches
      • Central Bank of India Customer Care Number
      • Bank of Baroda Customer Care – Missed Call and Toll Free Number
      • Bank of Maharashtra Customer Care
      • Punjab National Bank Customer Care Number – PNB Grievance Redressal
      • IOB Customer Care Number
    • UPI
      • Popular Searches
      • BHIM
      • Google Pay
      • BHIM SBI Pay
      • Union Bank UPI
      • HDFC UPI
    • Debit Card
      • Popular Searches
      • SBI Debit Card
      • HDFC Debit Card
      • PNB Debit Card
      • Axis Bank Debit Card
      • Kotak Debit Card
    • RTGS
      • Popular Searches
      • RTGS Process
      • SBI RTGS
      • ICICI Bank RTGS Form
      • Axis Bank RTGS Form
      • HDFC RTGS Form
    • IMPS
      • Popular Searches
      • IMPS Limit
      • IMPS vs. NEFT
      • IMPS vs. NEFT vs. RTGS
      • MMID
    • Cheque
      • Popular Searches
      • Types of Cheques
      • Blank Cheque
      • Cancelled Cheque – How to Write a Cancelled Cheque?
      • Account Payee Cheque
      • Banker’s Cheque
    • Bank Holidays
      • Popular Searches
      • Bank Holidays in June 2023
      • Bank Holidays in July 2023
      • Bank Holidays in August 2023
      • Bank Holidays in September 2023
      • Bank Holidays in October 2023
    • Mobile Banking
      • Popular Searches
      • SBI Mobile Banking
      • HDFC Mobile Banking
      • Bank of Baroda Mobile Banking
      • Indian Bank Mobile Banking
      • Canara Bank Mobile Banking
    • Passbook
      • Popular Searches
      • SBI Passbook
      • Union Bank Passbook
      • BOB Passbook
      • HDFC Passbook
      • Axis Bank Passbook
    • Demand Draft
      • Popular Searches
      • Demand Draft Validity
      • Demand Draft Form
  • Savings Account
    • Popular Searches
    • What is a savings account
    • SBI Savings Account
    • Bank of Baroda Saving Account
    • Bank of Maharashtra Saving Account
    • Central Bank of India Saving Account
  • Insurance
    • General Insurance
    • Car Insurance
    • Travel Insurance
    • Pension & Retirement
  • About Us
  • Contact
Investment Simplified > Mutual Funds > Multicap Funds: Definition, Features, Benefits & Risks
Mutual Funds

Multicap Funds: Definition, Features, Benefits & Risks

Ashish Kumar
Last updated: 2022/12/19 at 11:29 AM
Ashish Kumar Published June 23, 2022 8 Min Read
Share
SHARE
What are Multicap Funds?Top Multicap Funds to Invest In Benefits of Investing in Multicap Funds Risks of Investing in a Multicap Fund Tax Benefits of Investing in Multicap Funds Best Features of Multicap Mutual Funds Taxability of Multi-cap Funds Conclusion FAQs

A Multicap fund is an equity mutual fund that invests across industries and market capitalization segments, such as large-cap, mid-cap, and small-cap. These mutual funds typically outperform in various market conditions, reducing volatility while providing good relative returns to investors in the long run. As a result, multi-cap funds are ideal long-term investment options for retail mutual fund investors who may lack the expertise to understand various stages of the investment cycle.

What are Multicap Funds?

Before investing, there is always a difficulty with the category of Mutual Funds in which you should invest. Do you want to invest in large-cap, mid-cap, small-cap, multi-cap, or sectoral funds? Each category has advantages and disadvantages that must be considered.

While large-cap funds provide greater portfolio stability, mid-cap and small-cap funds provide exceptional returns. Sectoral funds can boost profits if a specific industry is performing exceptionally well. Nonetheless, one fund category stands out among the crowd due to its considerable flexibility: multi-cap.

Multicap mutual funds meaning, in other words, are diversified equity funds that invest in stocks of companies with varying market capitalisations. The investments are made in varying proportions to meet the fund’s investment objective. This is a brief summation of multicap fund meaning, which will help you move forward with this article.

Multicap fund

Top Multicap Funds to Invest In

Aside from stock selection, the fund manager switches the fund’s holdings between large-cap, mid-cap, and small-cap stocks as market movements dictate. Using the leeway, fund managers have a large-cap bias and continue to increase or decrease their mid-cap holdings by a small margin as market conditions change.

Because these funds invest in a variety of companies, they produce spectacular returns during bull markets, sometimes outperforming pure large/mid-cap funds. This occurs because the underlying stocks in the funds can unlock their values and capitalise on growth opportunities during a bull market.

Mutual fund5 Yr. Returns3 Yr. ReturnsMin. InvestmentRating
Quant Active Fund Growth25.16%34.52%—NA
Mahindra Manulife Multi-Cap Badhat Yojana Regular Plan-Growth—29.5%—NA
ICICI Prudential Smallcap Fund – Direct Plan-Growth14.12%27.6%₹50003 stars
ICICI Prudential Smallcap Fund12.81%25.81%₹50003 stars
Baroda Multi-Cap Fund Plan A Growth16.67%25.47%—NA
SBI Contra Fund – Direct Plan – Growth13.93%24.06%₹50002 stars
SBI Contra Fund13.17%23.25%₹50002 stars
Invesco India Multicap Fund Growth16.58%22.99%—NA
BNP Paribas Multi Cap Fund Growth16.07%22.25%—NA
Principal Multi Cap Growth Fund Growth17.5%21.51%—NA

Benefits of Investing in Multicap Funds

Improved Risk-Adjusted Returns:  Better risk management comes with the benefit of diversification. For example, if small-cap companies are underperforming, fund managers can automatically shift their focus to other companies, such as large-cap companies, to manage risk. As a result, risk-adjusted returns in multi-cap funds outperform those in single-cap funds.

Professional Administration: The performance of multi-cap mutual funds is heavily reliant on the fund managers. This is because fund managers make allocation decisions. An experienced fund manager will be able to capitalize on market conditions and optimize investments to provide the best possible returns.

Extremely Liquid: Multi-cap funds, like all other mutual funds, are highly liquid investments. These are open-ended equity schemes that can be sold at any time in order to recoup your investment. They do not have a contract. You can sell them whenever you need money.

Excellent for Wealth Creation: Multi-cap funds have historically outperformed inflation in the long run. Investing in multi-cap funds can be an excellent way for investors to multiply their wealth.

Read More: Best Performing Mutual Funds in India

Risks of Investing in a Multicap Fund

Risk Tolerance: A Multicap fund is one of the safer investment options in the stock market, but it still comes with medium risk. So, be sure you understand what medium risk is and if it is right for you currently or not before investing.

Long Term Investments: A multicap fund provides good returns, but when you are investing for a long time, especially more than five years. So, if you want short term returns, multicap funds might not be best suited for you. You should at least invest in these funds for more than five years for the best results.

Tax Benefits of Investing in Multicap Funds

It is the post-tax returns that are important. To determine this, you should be familiar with how multi-cap funds are taxed. The capital gains from selling your multi-cap fund are taxed depending on how long you held the investment.

Short Term Capital Gain (STCG): If you sell your investments within one year, the gains you receive from your investment are classified as Short Term Capital Gain (STCG) and must be taxed at 15%.

Long Term Capital Gains Tax (LTCG): Gains on multi-cap investments held for more than a year are taxed and considered as Long Term Capital Gains (LTCG). Gains of up to one lakh rupees in a fiscal year are tax-free. Gains over one lakh rupees are taxed at a rate of 10%.

Multicap fund

Best Features of Multicap Mutual Funds

  1. Multicap funds invest 65% of their amount in company stocks. These companies have different capital values, offering you exposure to different stocks and making your portfolio diverse.
  2. You can reduce risk on multi-cap funds. Fund managers can invest a large portion in the large-cap company and a small amount in the mid-cap or small-cap company and drive more profit.
  3. For better allocation and more profits, it is necessary to hire a fund manager with a profitable history.

Taxability of Multi-cap Funds

When investing in multi-cap funds, the investors will have to pay taxes on the capital gains. if the investors sell the units within one year of purchasing them, they will have to pay 15% tax on those units under the short-term capital gains.

Whereas if you hold units for more than a year, it will be considered a long-term capital gain. In this, the gains up to Rs. 1 Lakh are free of tax, and for the amount above Rs. 1 Lakh, you will have to pay 10% tax.

Conclusion

Multi-cap funds invest in a variety of market capitalization segments. There are no restrictions on allocations to specific market cap segments. Multi-cap funds’ large-cap allocation provides stability in volatile markets. In contrast, mid-cap and small-cap allocations allow multi-cap funds to outperform the market and generate significant returns for investors. A Multi-cap fund is appropriate for investors with moderately high to high-risk appetites for long-term financial goals such as marriage, child education, and retirement planning.

FAQs

1. What percentage of your multi cap fund investments is allocated to large-cap, mid-cap, and small-cap stocks?

The fund managers determine the proportion of large, mid, and small-cap stocks in multi-cap funds. Investors have no control over it. Fund managers adjust their allocation based on economic and market conditions. If they believe it is time to be conservative, they increase the portfolio’s allocation of large-cap stocks. On the other hand, if they believe that market conditions will improve in the future, they will increase their allocation to mid-cap and small-cap stocks.

2. What is the minimum investment amount required to invest in multi-cap funds?

The process and prerequisites for investing in multicap mutual funds are the same as investing in other mutual funds. Investing in these funds does not require a large sum of money. To invest in multi-cap funds, you can start a SIP with as little as Rs. 500.

3. Why should one consider investing in Multi-Cap Funds?


It allows you to earn higher returns by investing in small-cap companies with high growth potential while keeping the risk balanced by investing in large-cap companies. The risk is moderate, and the long term returns are excellent. So why not put money into them?

4. Is Multicap Fund good for the long term?

A Multicap fund is best for investors with a risk appetite as the fund is allocated to large-cap as well as small-cap and mid-cap companies.

5. What are the best multi cap funds in India?

PGIM India Flexi Fund, Axis Flexi Cap Fund and SBI Focused Equity Fund are some of the best multicap funds in India.

Read more about XIRR in Mutual Funds.

Share This Article
Facebook Twitter Whatsapp Whatsapp Email Copy Link Print
By Ashish Kumar
Ashish Kumar is a SEO content writing enthusiast and an avid blogger who closely follows the latest financial trends. He writes about various topics related to Insurance, Aadhaar, PAN, Banking and other financial products.
Previous Article low risk mutual funds What are low risk mutual funds?
Next Article nps vs ppf NPS Vs PPF: Differences & Similarities
Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Popular Searches
  • What Is Mutual Fund
  • What Are Contra Funds
  • What Are Money Market Mutual Fund
  • How To Invest In SIP
  • Types Of Mutual Funds
  • SIP Vs Mutual Funds
  • ELSS Tax Saving
  • Flexi Cap Fund
  • What Is SIP
  • What Are Tax Saver Mutual Funds
  • Best Debt Mutual Fund
  • Mid Cap Mutual Funds
  • Best Mutual Funds
  • What Is A Liquid Fund
  • Large Cap Fund
  • Best Sip To Invest
  • Equity Mutual Fund Types
  • What Is Equity Mutual Fund
  • What Is Tax Saver Sip
  • What Is ELSS Fund

Social Media

Social Media
Facebook
YouTube
Instagram
Twitter
Linkedin

Recent Post

IDFC Debit Card
IDFC Debit Card
Banking
Federal Bank Debit Card
Federal Bank Debit Card
Banking
City Union Bank Balance Check Number
City Union Bank Balance Check Number – Enquiry by SMS, Missed Call, Netbanking
Banking
DCB Bank Balance Check Number
DCB Bank Balance Check Number – Enquiry by SMS, Missed Call, Netbanking
Banking

You Might also Like

PNB RTGS Form

Punjab National Bank RTGS Form

Customers can make fund transfer through three different ways i.e. IMPS, RTGS…

Read More
BOB RTGS Charges

BOB RTGS Charges

Bank of Baroda is one of the oldest public sector banks operational…

Read More
Retirement Calculator

How to Use a Retirement Calculator

Retirement calculators are a web-based tool that helps in calculating and showing…

Read More
Allahabad Bank customer care

Allahabad Bank Customer Care Number

Old customers of Allahabad Bank as well as the existing customers of…

Read More
IS logo 250px

We are here to make your investment journey simple by delivering content on financial topics in plain English.

Categories

  • Tax
  • Cryptocurrency
  • Aadhaar
  • Mutual Funds
  • Banking
  • General Insurance
  • Pension & Retirement
  • Car Insurance
  • Travel Insurance

Quick Link

  • About Us
  • Contact
  • Terms & Conditions
  • Privacy Policy
Social Media
Facebook
YouTube
Instagram
Twitter
Linkedin

We are here to make your investment journey simple by delivering content on financial topics in plain English.

Categories

  • Tax
  • Cryptocurrency
  • Aadhar
  • Mutual Funds
  • General Insurance
  • Pension & Retirement
  • Car Insurance
  • Travel Insurance

Quick Link

  • About Us
  • Contact
  • Terms & Conditions
  • Privacy Policy

Social Media

Copyright © 2023 Investment Simplified. All rights reserved.

Welcome Back!

Sign in to your account

Lost your password?