Personal Finance
Best Mutual Fund in India: Mutual fund investing is witnessing strong growth in India, driven by increasing financial awareness, aggressive investor education campaigns by AMFI, and easy access through digital investment platforms such as Zerodha, Groww and Upstox. While investors can choose from categories like large-cap, mid-cap and small-cap funds, those seeking broader diversification across companies of different market capitalisations may consider multi-cap mutual funds as a suitable option.
What are Multi-Cap Funds?
As per Securities and Exchange Board of India (SEBI) guidelines, the multi-cap mutual fund category includes funds that hold 75% of assets in equity and equity-related instruments. Nearly 25% of assets are allocated to large-cap stocks, 25% to mid-cap stocks and another 25% to small-cap stocks.
What 25-25-25 Allocation Means For Investors?
The mandatory allocation rule means a multi cap fund must always hold at least 25% of its assets in large-cap stocks, 25% in mid-cap stocks and 25% in small-cap stocks. The remaining portion can be allocated by the fund manager within the scheme’s stated mandate, subject to regulatory and portfolio limits.
This structure gives investors exposure to different parts of the equity market. Large-cap companies usually offer relative stability because they are established businesses with stronger balance sheets and wider institutional ownership. Mid-cap companies can provide faster growth opportunities, but they may face higher earnings and valuation volatility.
5 Multi Cap Funds That Delivered Highest Returns In 3 Years
Here is the list of top five multi-cap mutual funds with highest three year return (direct), as per Association of Mutual Funds in India (AMFI) data as on June 24, 2026.
| Scheme Name | Latest NAV (₹) Direct | 3-Year Return (%) Direct |
| HSBC Multi Cap Fund | 20.6001 | 22.46 |
| Kotak Multicap Fund | 21.425 | 22.18 |
| Bank of India Multicap Fund | 20.24 | 21.51 |
| Axis Multicap Fund | 19.63 | 21.18 |
| ICICI Prudential Multicap Fund | 960.03 | 20.04 |
Benefits of Multi Cap Mutual Funds
Investors looking for a built-in diversification can benefit from multi-cap mutual funds. These funds can help investors get exposure to leaders and challengers across market caps. The mandate mix also help investors stay in the investment game for longer and manage sentiment swings.
Multi Cap Mutual Funds Risks
Key risks related to multi cap mutual funds are volatility from small caps, liquidity handling. The rule constraints that managers can’t increase their percentage of large cap during volatile markets can also be counterproductive for returns.
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