5 Best Multi-Cap Mutual Funds In India in 2020

Stock markets are unpredictable, making it hard to decide which mutual fund scheme to pick to meet your financial goal. The re-categorisation of these funds, introduced by market regulator SEBI over a year ago has simplified choices.

One of the many categories is multi-cap mutual funds.

What are multi-cap mutual funds?

According to SEBI rules, multi-cap mutual fund schemes can invest across market caps (capitalisation) and sectors, as per the insight of the fund manager.

In investment, companies are grouped according to their market caps, which in simplest terms can be expressed as the number of shares offered by a company x current share price.

For example, the largest company by market cap in India is Reliance Industries Limited at over Rs 9.3 trillion.

The top 100 largest companies are called large caps. Companies ranked 101 to 150 are mid-cap (or medium cap) and 251 onward are small caps. These rankings are updated every 6 months and those on the top are generally considered 'low-risk' stocks.

While large-cap mutual funds and mid-cap mutual funds specifically invest in large-cap and mid-cap stocks, respectively, multi-cap mutual funds have no restriction in terms of market capitalisation or sector. The fund manager can choose stocks to suit their investment objective to provide a wider scope for growth and asset allocation.

Are they good for you?

With the freedom to invest across market capitalisation and sectors, the fund managers can change their asset allocation based on market conditions. This does not necessarily mean there will be no risk involved. Exposure to small and mid caps come with risks, and the prospects for growth of a given sector could change due to various economic factors.

However, if you are planning to invest in only one kind of mutual fund for a long period (5 years or more) and willing to take a moderate level of risk, multi-cap funds can be rewarding. Large caps provide stability and small as well as mid-caps hold the potential to give high returns, thus reducing the overall risk through diversification.

Then again you have to pick a good scheme within the category and here are 5 such scheme recommendations.

5 best multi-cap mutual fund schemes for 2020

The following ranking is based on 5-year annualised returns as on 14 February 2020, if you were to invest Rs 10,000 per month in the schemes for the last five years.

The data for comparison has been obtained from etmoney.com and simplified for an ordinary investor.

1. Canara Robeco Equity Diversified Fund

As of 31 December 2019, the fund is 95.57 percent invested in equity, in which 57.69 percent are large-cap stocks, 32.69 percent midcap and 9.62 percent small-cap.

On Rs 10,000 monthly SIP	Total Investment (Rs)	Profit (Rs)	Value of Investment (Rs)	Annualised returns
5-year return	6 lakh	2.44 lakh	8.44 lakh	13.36%
3-year return	3.6 lakh	82,777	4.43 lakh	13.95%
1-year return	1.2 lakh	15,560	1.36 lakh	12.97%

2. Edelweiss Multi Cap Fund

The scheme primarily invests in large caps.

On Rs 10,000 monthly SIP	Total Investment (Rs)	Profit (Rs)	Value of Investment (Rs)	Annualised returns
5-year return	6 lakh	2.13 lakh	8.13 lakh	12.11%
3-year return	3.6 lakh	57,730	4.18 lakh	9.93%
1-year return	1.2 lakh	10,579	1.31 lakh	8.82%

3. Kotak Standard Multicap Fund

As per last available data, 70.59 percent of its total portfolio is invested in large caps, 21.52 percent in mid-caps, 1.9 percent in small caps and 5.99 percent in assets other than equity.

On Rs 10,000 monthly SIP	Total Investment (Rs)	Profit (Rs)	Value of Investment (Rs)	Annualised returns
5-year return	6 lakh	2.29 lakh	8.29 lakh	12.91%
3-year return	3.6 lakh	62,156	4.22 lakh	10.65%
1-year return	1.2 lakh	10,343	1.3 lakh	8.62%

4. UTI Equity Fund

Out of the 77.5 percent of total allocation on equity, stocks invested in are primarily large-cap and mid-cap.

On Rs 10,000 monthly SIP	Total Investment (Rs)	Profit (Rs)	Value of Investment (Rs)	Annualised returns
5-year return	6 lakh	2.28 lakh	8.28 lakh	12.84%
3-year return	3.6 lakh	80,825	4.41 lakh	13.64%
1-year return	1.2 lakh	16,673	1.37 lakh	13.89%

5. SBI Magnum MultiCap Fund

The fund invests a minimum of 65 percent of its assets in equity, primarily large-cap and can invest up to 35 percent in debt and money market instruments.

On Rs 10,000 monthly SIP	Total Investment (Rs)	Profit (Rs)	Value of Investment (Rs)	Annualised returns
5-year return	6 lakh	2.03 lakh	8.03 lakh	11.62%
3-year return	3.6 lakh	53,336	4.13 lakh	9.21%
1-year return	1.2 lakh	9,616	1.3 lakh	8.01%

Note
Mutual fund investments are subject to market risks and may not replicate results seen in the past year. Please read fund related documents and check past performance before you make a decision.

Disclaimer
The article is not a solicitation to buy, sell in securities mentioned in the article. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article.

About the author
Olga Robert has been covering equity markets and personal finance for over two years.