Multi-Cap Funds for Long-Term Investment

What Are Multi-Cap Funds?

Multi-cap funds are equity schemes that must invest at least 75% of their total assets in stocks. Unlike other categories, they are bound by a strict regulatory structure, which requires them to maintain a minimum of 25% each in Large-cap, Mid-cap, and Small-cap companies at all times.

While the fund manager has the flexibility to allocate the remaining 25% based on market opportunities, the core 75% ensures disciplined, multi-sector diversification. This structure prevents the fund from becoming overly concentrated in a single market segment.

Top Multi-Cap Funds for Long-Term Investment

Here are the best multi-cap funds for long-term investment, with their returns

1. Nippon India Multi Cap Fund Direct - Growth

   One of the largest in its category, it employs a high-conviction "growth at reasonable valuation" strategy, utilising over 100 stocks. It is known for maintaining a proper 25% balance across large, mid, and small-caps to capture broad market alpha.

   Parameters	Details
   Fund Name	Nippon India Multi Cap Fund Direct-Growth
   NAV	₹ 322.65 (as on 14th January, 2026)
   AUM	₹45,881.41 Crs
   Expense Ratio	0.7%
   Return 5 Years	31.02%
   Minimum Investment	SIP ₹1000 & Lumpsum ₹100
   Risk Level	Principal at very high risk
   Launch Date	NA
   Asset Allocation	Equity: 98.94%, Debt: 0.01%, Others: 1.05%
   Top Sectors	Real Estate Consumer Discretionary Industrials Consumer Staples Diversified Energy & Utilities Financial Healthcare Materials Technology
   Top Holdings	HDFC Bank Ltd Axis Bank Ltd GE T&D India Ltd ICICI Bank Ltd Reliance Industries Ltd Infosys Ltd Max Financial Services Ltd State Bank of India Linde India Ltd Bajaj Finance Ltd
   Fund Managers	Sailesh Raj Bhan Ashutosh Bhargava
   Fund Type	Open-ended

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2.  ICICI Prudential Multicap Fund Direct - Growth

   This fund employs a combination of top-down and bottom-up approaches, focusing on companies with strong cash flows and low debt levels. It emphasises risk management and typically maintains a concentrated portfolio compared to its peers.

   Parameters	Details
   Fund Name	ICICI Prudential Multicap Fund Direct Plan-Growth
   NAV	₹ 889.77 (as on 14th January, 2026)
   AUM	₹15,523.25 Crs
   Expense Ratio	0.93%
   Return 5 Years	25.1%
   Minimum Investment	SIP ₹1000 & Lumpsum ₹5,000
   Risk Level	Principal at very high risk
   Launch Date	NA
   Asset Allocation	Equity: 97.64%, Debt: 0.31%, Others: 2.05%
   Top Sectors	Financial Technology Consumer Discretionary Industrials Consumer Staples Energy & Utilities Healthcare Materials Real Estate Unspecified
   Top Holdings	ICICI Bank Ltd Repo Vedanta Ltd Reliance Industries Ltd Bharti Airtel Ltd Sun Pharmaceutical Industries Ltd HDFC Bank Ltd Hindustan Unilever Ltd Ultratech Cement Ltd Infosys Ltd
   Fund Managers	Anand V Sharma Sharmila D'Silva
   Fund Type	Open-ended

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3. Baroda BNP Paribas Multi Cap Fund Regular - Growth

   It employs an aggressive investment style, characterised by high portfolio turnover, actively shifting between sectors based on economic cycles. Being a regular plan, it carries a higher expense ratio and is suited for those seeking distributor-led advice.

   Parameters	Details
   Fund Name	Baroda BNP Paribas Multi Cap Fund Regular-Growth
   NAV	₹ 283.81 (as on 14th January, 2026)
   AUM	₹2,953.13 Crs
   Expense Ratio	1.97%
   Return 5 Years	22.72%
   Minimum Investment	SIP ₹1000 & Lumpsum ₹5,000
   Risk Level	Principal at very high risk
   Launch Date	12th September, 2003
   Asset Allocation	Equity: 96.6%, Debt: 4.54%, Others: -1.14%
   Top Sectors	Industrials Consumer Staples Diversified Energy & Utilities Financial Healthcare Materials Technology Consumer Discretionary
   Top Holdings	Others CBLO HDFC Bank Ltd ICICI Bank Ltd Reliance Industries Ltd Radico Khaitan Ltd Sagility India Ltd. One 97 Communications Ltd Navin Fluorine International Ltd TVS Motor Company Ltd Karur Vysya Bank Ltd
   Fund Managers	Sanjay Chawla Sandeep Jain
   Fund Type	Open-ended

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4. Sundaram Multi Cap Fund Direct - Growth

   This fund targets structural growth stories in the Indian economy, particularly in the manufacturing and financial sectors. It maintains a lean portfolio and a low expense ratio, prioritising companies with strong quality and momentum characteristics.

   Parameters	Details
   Fund Name	Sundaram Multi Cap Fund Direct-Growth
   NAV	₹ 425.57 (as on 14th January, 2026)
   AUM	₹2,842.03 Crs
   Expense Ratio	0.94%
   Return 5 Years	22.73%
   Minimum Investment	SIP ₹1000 & Lumpsum ₹100
   Risk Level	Principal at very high risk
   Launch Date	2nd January, 2013
   Asset Allocation	Equity: 97.2%, Others: 2.8%
   Top Sectors	Healthcare Materials Real Estate Technology Consumer Discretionary Industrials Consumer Staples Energy & Utilities Financial
   Top Holdings	HDFC Bank Ltd ICICI Bank Ltd Larsen & Toubro Ltd Repo Kotak Mahindra Bank Ltd Reliance Industries Ltd Bharti Airtel Ltd Mahindra & Mahindra Financial Services Ltd DCB Bank Ltd Affle (India) Ltd
   Fund Managers	Rohit Seksaria Ratish Varier
   Fund Type	Open-ended

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5. Sundaram Multi Cap Fund Direct - Growth

   A newer entrant that utilises a data-driven momentum and quality tilt to identify trending stocks across all market caps. It has a competitive exit load structure (90 days) but a higher expense ratio due to its regular plan status.

   Parameters	Details
   Fund Name	Sundaram Multi Cap Fund Direct-Growth
   NAV	₹ 425.57 (as on 14th January, 2026)
   AUM	₹2,842.03 Crs
   Expense Ratio	0.94%
   Return 5 Years	22.73%
   Minimum Investment	SIP ₹1000 & Lumpsum ₹100
   Risk Level	Principal at very high risk
   Launch Date	2nd January, 2013
   Asset Allocation	Equity: 97.2%, Others: 2.8%
   Top Sectors	Healthcare Materials Real Estate Technology Consumer Discretionary Industrials Consumer Staples Energy & Utilities Financial
   Top Holdings	HDFC Bank Ltd ICICI Bank Ltd Larsen & Toubro Ltd Repo Kotak Mahindra Bank Ltd Reliance Industries Ltd Bharti Airtel Ltd Mahindra & Mahindra Financial Services Ltd DCB Bank Ltd Affle (India) Ltd
   Fund Managers	Rohit Seksaria Ratish Varier
   Fund Type	Open-ended

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Features of Multi-Cap Funds

Mutual funds are meant to help you achieve your individual and your family's financial goals and generate an alternate source of income at the same time. The features of multi-cap mutual funds include:

1. Mandatory Diversification: 

   Unlike other categories, these funds are legally required to invest at least 25% each in Large-cap, Mid-cap, and Small-cap stocks. This ensures your money is always distributed across companies of all sizes, preventing the fund manager from ignoring any specific segment.

2. Structured Risk-Reward Balance: 

   They offer a "middle ground" approach. The 25% Large-cap allocation provides a stable foundation, while the mandatory 50% combined exposure to mid and Small Caps captures high growth potential.

3. Disciplined Asset Allocation: 

   Because the 25% minimum in each category is mandatory, the fund maintains a consistent style regardless of market cycles. This prevents the fund from becoming "Large-cap heavy" during volatile times, ensuring you always have skin in the game for a mid-market recovery.

4. Ideal for Moderate to High Risk Appetite: 

   Contrary to being "low risk," Multi-Cap funds are actually more volatile than Large-cap or Flexi-cap funds due to their compulsory 50% exposure to smaller companies. They are best suited for investors with a 5-year or longer horizon who want automatic diversification without managing multiple funds.

Taxability and Other Advantages of Multi-Cap Funds for Long-Term Investment

Multi-cap funds are taxed similarly to other equity funds. Your gains are added to your total income and taxed as per the slab you fall under. The rate of your tax will depend on the holding period of your fund. All long-term gains up to Rs 1 lakh are exempted from tax, but gains above this limit are taxed at 10%. In the case of short-term gains, returns are taxed at 15% without considering your income tax slab.

• Other advantages of multi-cap funds include:
• Helps first-time investors by reducing the risk considerably
• Provides more investment opportunities across varied market segments
• Sustainable returns for up to 7 years

Conclusion

Multi-cap funds perform well owing to their multiple investment options and opportunities across sectors and industries. However, investors should carefully evaluate their investments and current exposure before investing in a multi-cap scheme. It is a scheme suitable for individuals seeking low-risk investments.