Multi-cap funds with equity exposure of 25 per cent each in the large-, mid- and small-caps have delivered better returns in the last few years despite the markets remaining highly volatile.

Among various multi-cap funds, Mahindra Manulife Multicap Fund, Nippon India Multi Cap, Baroda BNP Paribas Multi Cap, ICICI Prudential Multicap, Sundaram Multi cap and Invesco India Multicap Fund have done much better.

Consistent returns

For instance, the Mahindra Manulife Multicap Fund has delivered a consistent return of 32 per cent in the last three years and 18 per cent in the last five years. The fund has an asset under management (AUM) of ₹1,791 crore as of June 16.

While Nippon India and Baroda BNP muti-cap funds have also performed better, giving a return of 39 per cent and 31 per cent over three years; in five years, it was 16 per cent and 14 per cent. The AUM of Nippon India and Baroda BNP was ₹16,190 crore and ₹1,740 crore.

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The benchmark Nifty 500 Multi Cap index has delivered a return of 29 per cent and 12 per cent over three-year and five-year period.

The AUM in this segment has jumped 12 per cent to ₹74,061 crore as of May-end against ₹66,100 crore as of January 2023 on the back of sharp run-up in markets.

Exposure across m-caps

The multi-cap funds have exposure across different market-caps which provides good growth opportunity. Besides quality of portfolios, the risk management framework in terms of capping single-stock weights and diversification across sectors is the key element in this fund category.

Sunita Satapathy, Director of mutual fund distributor Glosome Life Coaching Llp, said the beauty of multi-cap mutual funds lies in their ability to navigate different market conditions and represent all three market-cap disciplines. These funds are designed to perform well in various market cycles, making them suitable for investors seeking stability and growth. With a diversified portfolio across market-caps, multi-cap funds offer a balanced approach to capture opportunities in different segments of the market, said Satapathy.

However, investors should carefully evaluate their investment objectives, risk tolerance and consult with a financial advisor before making any investment decisions, she added.

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