A Deep Dive into Multicap Funds
Your comprehensive guide to diversified equity investing.
What is a Multicap Fund?
Multicap mutual funds are a unique type of equity fund that diversifies your investment across companies of all sizes: large, mid, and small-cap. This dynamic allocation allows the fund manager to capitalize on opportunities across the entire market spectrum, balancing stability from large-cap stocks with the high growth potential of small and mid-cap stocks.
This blended strategy makes multicap funds a suitable choice for investors with a moderate risk appetite seeking a single solution for broad market exposure without the need to research and invest in different types of funds separately.
Typical Asset Allocation
Core Advantages of Investing
Built-in Diversification
Invest across the market spectrum (large, mid, small-cap) in a single fund, reducing concentration risk.
Balanced Risk-Reward
Offers a moderate risk profile by combining the stability of large-caps with the growth of smaller companies.
Ideal for Long-Term Goals
Best suited for an investment horizon of 5+ years, allowing market cycles to average out for good returns.
Key Figures at a Glance
1%
Typical Expense Ratio
1%
Exit Load within 1 Year
₹500
Minimum SIP
₹5000
Minimum Lumpsum
Understanding Your Tax Liability
The tax on your returns depends entirely on your holding period. The flowchart below simplifies how capital gains from multicap funds are taxed.
NO
Short-Term Capital Gain (STCG)
15% Tax
A flat 15% tax is applied to the entire gain.
YES
Long-Term Capital Gain (LTCG)
0% or 10% Tax
Gains up to ₹1 Lakh in a financial year are tax-free. Gains beyond ₹1 Lakh are taxed at 10%.
Visualize Your Potential Growth
SIP Growth Calculator
Invested Amount:
₹6,00,000
Estimated Returns:
₹5,61,902
Total Value:
₹11,61,902
Comparing Popular Multicap Funds
While past performance does not guarantee future results, looking at historical returns can provide insights. The chart below shows illustrative 5-year annualized returns for some well-known multicap funds.
Frequently Asked Questions
They carry moderate risk. The investment in large-cap stocks provides a cushion and stability, while the mid and small-cap components introduce higher risk for potential long-term growth. They are generally safer than pure small-cap funds but riskier than pure large-cap funds.
An investment horizon of at least 5 to 7 years is recommended to get good returns. Longer periods, such as 10-12 years, allow your investment to fully benefit from the power of compounding and navigate multiple market cycles effectively.
Yes, they are highly suitable for investors with medium to long-term financial goals, such as retirement planning, children’s education, or wealth creation. The diversified nature helps in capturing growth over an extended period.
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