Partner With Us NRI

Open Free Demat Account Online with ICICIDIRECT

Benefits of Investing in Multi cap Funds


Mutual funds have become popular investment tools for those who want to earn superior returns and diversify their portfolio. Indian investors are moving away from traditional investment avenues like fixed deposits and gold to explore mutual funds. 

When it comes to making mutual fund investment decisions, there are various kinds available in the market that you can choose from depending on your risk profile, investment horizon and goals. Investors often find themselves stumped when deciding between large-cap, mid-cap, small-cap and sectoral funds. 

Each of these mutual funds has its own benefits. While large-cap funds provide stability to your portfolio, mid-cap funds benefit you from their growth opportunities. Small-cap funds offer the possibility of higher returns but come with higher risk. Sectoral funds can help you take advantage of a boom in a particular sector. 

One class of mutual funds that stand apart from all of these are multi-cap funds. These equity funds invest in companies of different market caps and sectors, thereby providing you with a slice of all the above categories. New investors often choose multi-cap funds to invest in because of the diversification benefits. Apart from that, they also provide better risk-adjusted returns and professional management. 

If you are considering investing in multi-cap funds, then here are the advantages to look at. 

Advantages of Multi-Cap Funds 

1. Diversification 

The obvious advantage of multi-cap mutual funds is the diversification it provides. These funds invest in companies with varying market caps and sectors, thereby providing a natural diversification to your portfolio. You don’t have to choose large-cap, mid-cap and small-cap companies yourself. The fund has exposure to them all. 

2. Better Risk-Adjusted Returns 

With the benefit of diversification comes the benefit of better risk management. For instance, if small-cap companies are not performing well during a period, fund managers can automatically shift focus to other companies such as large-cap companies to manage risk. Therefore, the risk-adjusted returns in multi-cap funds are better than in single-cap funds. 

3. Professional Management 

Multi-cap mutual funds are highly dependent on their fund managers for their performance. This is because fund managers have to make decisions regarding allocation. An experienced fund manager will be able to take advantage of market conditions and optimise investments to provide the best returns possible.  

4. Highly Liquid 

Like all other mutual funds, multi-cap funds are highly liquid investments. These are open-ended equity schemes that can be sold at any time to recover your money. They have no lock-in period. If you need funds, you can sell them at any time. 

5. Great for Wealth Creation 

Historically, multi-cap funds have generated inflation-beating returns in the long run. For investors seeking to multiply their wealth, investing in multi-cap funds can be a great way to do that. 

Additional Read: Difference between large cap, mid cap and multi cap mutual funds

What to Consider Before Investing in Multi-Cap Funds

  • Always consider your investment horizon before deciding to invest in a multi-cap fund. These are best suited for long-term investments. 
  • Check the fund manager’s history and vision to ensure it aligns with your investment objectives. 
  • Be sure you have the risk appetite to stomach ups and downs in the market since these funds have exposure to equities. 


Multi-cap mutual funds are equity funds that have exposure to different categories of company stocks. They have in-built diversification and provide risk-adjusted returns. If you are a first-time investor in mutual funds or want to diversify your portfolio, then multi-cap funds can be an excellent option to consider. 

Disclaimer: ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400025, India, Tel No:- 022 - 2288 2460, 022 - 2288 2470. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code:-07730) and BSE Ltd (Member Code :103) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Mr. Anoop Goyal, Contact number: 022-40701000, E-mail address: complianceofficer@icicisecurities.com. Investment in securities market are subject to market risks, read all the related documents carefully before investing. PFRDA registration numbers: POP no -05092018. We are distributors of Insurance and Mutual funds, Corporate Fixed Deposits, NCDs, PMS, NPS and AIF products. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon.

The non-broking products / services like NPS etc. are not exchange traded products / services and all disputes with respect to the same would not have access to Exchange investor redressal or Arbitration mechanism.

Most Popular

  • 13 May 2022
  • ICICI Securities

The Five-Point Financial Planning Checklist For Your Family

Whether you just got married or planning to have a baby or have dependents, you should have financial plans for every stage in your life to ensure a secured future for your family members. Here are five things you can do financially for your family.   

  • 12 May 2022
  • ICICI Securities

What is a Zero Coupon Bond?

You get fixed returns in the form of interest until maturity when you invest in a bond. Zero-coupon bonds work a little differently. In this article, find out what zero-coupon bonds are, their advantages and whether you should invest in them. 

  • 12 May 2022
  • ICICI Securities

What are Cross Currency Pairs?

The forex market is the largest financial market globally. Currency trading is a lucrative and booming business. While most currencies trading happens in relation to the US Dollar, some don’t. That forms the basis of cross currency pairs. Here’s what you need to know about it. 

  • 12 May 2022
  • ICICI Securities

Investing principles from Benjamin Graham: The Father of Value Investing

Benjamin Graham was a British born economist, professor, and investor who taught at Columbia University. He was also a mentor to some of the most famous investors of the 20th century, including Irving Khan, John Templeton, & Warren Buffett. Buffett called him "the second most influential figure in his life, only after my father". 

  • 12 May 2022
  • ICICI Securities

How to Invest in Nifty 50?

The Nifty 50 is the benchmark index of the National Stock Exchange. It represents the 50 largest companies listed in India. Investing in the Nifty 50 can be a good idea for those looking to make index-linked returns. Here’s how you can invest in the index. 

  • 12 May 2022
  • ICICI Securities

Investment philosophy of Cathie Wood: The most powerful woman on Wall Street

Catherine Duddy Wood, also called Cathie Wood, is an investor who primarily invests in disruptive technologies and is the founder, chief executive officer, and chief investment officer of ARK Investment Management, LLC, an investment management firm mostly active in the United States.

  • 11 May 2022
  • ICICI Securities

How to Use Technology to Improve Your Finances

Technology has made life simpler for everyone. In the realm of personal finance, technology has streamlined many processes—from budgeting to automating your payments. On National Technology Day, let’s look at how technology has transformed our finances. 

  • 11 May 2022
  • ICICI Securities

How to Invest in your Every Goal with Mutual Funds?

Each of us is unique. We have different needs and goals in life. Some of us can ride along swinging markets, while some may need a relatively conservative investment tool. 

  • 11 May 2022
  • ICICI Securities

Four Reasons Why Entrepreneurs should Invest in Equity Mutual Funds

Equity mutual funds provide growth opportunities not just for individual investors but also for entrepreneurs and corporates. They make excellent investments for anyone looking for wealth creation. This article will give you four reasons why businesspeople should consider investing in equity mutual funds.