Investing in multi-cap mutual funds has gained significant traction among Indian investors due to their ability to provide balanced exposure to large-cap, mid-cap, and small-cap stocks. These funds offer diversification, growth potential, and risk mitigation, making them an attractive choice for long-term wealth creation. Here, we delve into the top multi-cap mutual funds to consider in 2025, their features, and their historical performance over the last one, three, and five years.
What Are Multi Cap Mutual Funds?
Multi-cap mutual funds invest across companies of all market capitalizations—large-cap, mid-cap, and small-cap. This flexible approach allows fund managers to adjust portfolio allocations based on market conditions, aiming to optimize returns while mitigating risks.
Features of Multi Cap Mutual Funds
- Diversification: Exposure to various market capitalizations reduces the risk associated with a specific segment.
- Flexibility: Fund managers can adapt to changing market trends, optimizing growth opportunities.
- Potential for High Returns: A balanced portfolio of large, mid, and small-cap stocks offers both stability and growth.
- Suitable for Long-Term Goals: These funds align well with financial goals like retirement planning, education, and wealth accumulation.
Top Multi Cap Mutual Funds in 2025
Here are some of the best-performing multi-cap mutual funds in India for 2025:
1. Parag Parikh Flexi Cap Fund
Fund Size: ₹31,000 crores
Expense Ratio: 0.78% (Direct Plan)
1-Year Returns: 12.5%
3-Year Returns: 19.8%
5-Year Returns: 18.6%
Key Features: This fund focuses on a mix of domestic and international equities, offering geographical diversification. It’s known for its value-investing approach.
2. Kotak Flexi Cap Fund
Fund Size: ₹28,000 crores
Expense Ratio: 0.64% (Direct Plan)
1-Year Returns: 10.9%
3-Year Returns: 17.6%
5-Year Returns: 16.4%
Key Features: With a dynamic allocation strategy, this fund capitalizes on opportunities across market caps and sectors.
3. HDFC Flexi Cap Fund
Fund Size: ₹40,000 crores
Expense Ratio: 1.12% (Direct Plan)
1-Year Returns: 11.2%
3-Year Returns: 18.3%
5-Year Returns: 15.8%
Key Features: This fund emphasizes a balanced approach, investing in fundamentally strong companies across all market caps.
4. SBI Flexi Cap Fund
Fund Size: ₹35,000 crores
Expense Ratio: 0.85% (Direct Plan)
1-Year Returns: 13.4%
3-Year Returns: 20.2%
5-Year Returns: 17.9%
Key Features: Known for its risk-adjusted returns, this fund leverages opportunities in both established and emerging companies.
5. Axis Flexi Cap Fund
Fund Size: ₹25,000 crores
Expense Ratio: 0.70% (Direct Plan)
1-Year Returns: 9.8%
3-Year Returns: 16.5%
5-Year Returns: 15.2%
Key Features: This fund follows a growth-oriented investment strategy, focusing on companies with robust potential for long-term wealth creation.
Benefits of Investing in Multi Cap Mutual Funds
- Balanced Risk-Return Profile: By diversifying across market caps, these funds balance risk and reward.
- Flexibility: Fund managers can shift investments between large, mid, and small-cap stocks based on market conditions.
- Expert Management: Managed by professionals who analyze market trends and company fundamentals.
- Wealth Creation: Suitable for achieving long-term financial goals, these funds offer the potential for compounding wealth.
How to Choose the Right Multi Cap Fund
Historical Performance: Review the fund’s past performance over various time frames.
Expense Ratio: Opt for funds with a low expense ratio to maximize net returns.
Fund Manager’s Expertise: Check the track record of the fund manager.
Portfolio Composition: Analyze the fund’s allocation across market caps and sectors.
Risk Profile: Ensure the fund’s strategy aligns with your risk tolerance and investment goals.
Tax Implications
Multi-cap funds are treated as equity-oriented funds for taxation purposes:
- Short-Term Capital Gains (STCG): Gains from investments held for less than 1 year are taxed at 15%.
- Long-Term Capital Gains (LTCG): Gains exceeding ₹1 lakh from investments held for more than 1 year are taxed at 10%.
Why Invest in Multi Cap Mutual Funds in 2025?
- Economic Recovery: With India’s economy rebounding post-pandemic, multi-cap funds can capture growth across sectors.
- Market Opportunities: The dynamic nature of these funds allows them to adapt to evolving market trends.
- Government Initiatives: Policies like ‘Make in India’ and increased infrastructure spending will benefit companies across market caps.
- Global Integration: Funds with international exposure offer additional diversification and growth opportunities.
Conclusion
Multi-cap mutual funds are an excellent choice for investors seeking a blend of stability and growth in their portfolios. The flexibility to invest across market capitalizations allows these funds to adapt to changing market conditions, offering the potential for superior returns.
Before investing, it’s crucial to assess your financial goals, risk tolerance, and time horizon. By selecting the right fund and staying invested for the long term, you can leverage the opportunities presented by India’s growing economy and achieve your financial aspirations.
Also read: Know About Mutual Funds and their Features
