Multi-Cap Funds Gain Traction as Investors Seek Diversification in Turbulent Markets

Bangalore: India's multi-cap mutual fund category is experiencing a resurgence in investor demand as market turbulence prompts a shift toward balanced equity exposure strategies.

Data from the Association of Mutual Funds in India reveals that multi-cap funds garnered ₹3,806 crore in net inflows during April 2026, representing approximately 10% of overall equity mutual fund inflows that month. The category now manages assets exceeding ₹2.28 lakh crore.

This momentum reflects broader market headwinds, including elevated crude oil prices, sustained foreign portfolio investor withdrawals, rupee weakness, and escalating geopolitical tensions. While benchmark indices including the Nifty 50 and Sensex face downward pressure, mid-cap and small-cap segments have demonstrated relative strength, with the Nifty Midcap 100 reaching record levels.

Market dynamics are characterized by frequent shifts between large-cap defensive positions and growth-oriented exposure in broader market segments. This environment has made flexible investment approaches particularly valuable. Multi-cap funds, which maintain mandatory allocations spanning large-cap, mid-cap, and small-cap securities, enable fund managers to capitalize on opportunities across different market segments dynamically.

The category delivers three significant benefits under current conditions: exposure diversification across sectors and company sizes, access to expansion-focused mid- and small-cap opportunities, and stability anchoring through large-cap holdings.

Performance metrics have remained resilient despite market gyrations. According to Value Research data as of May 27, 2026, the category's funds have delivered solid returns over the preceding twelve months.

Groww Multicap Fund has led the category with one-year returns of 16.6%. Other strong performers include Bank of India Multi Cap Fund, Tata Multicap Fund, Mahindra Manulife Multi Cap Fund, and ITI Multi Cap Fund.

Industry analysts note that this performance underscores the strategic value of responsive positioning across market segments, particularly as sector and size-based leadership patterns shift continuously.

Notably, multi-cap funds represent merely 6.4% of total equity mutual fund assets yet captured nearly 10% of equity inflows in April 2026, signaling a pronounced investor preference for allocation flexibility during periods of market uncertainty.

Top-10 Multi-Cap Equity Funds

Source: Value Research, as of May 27, 2026

| Fund Name | 1-Year Return (%) | Rank | Expense Ratio (%) | Launch Date | Net Assets (₹ Crore) | |---|---|---|---|---|---| | Groww Multicap Fund – Direct Plan | 16.60 | 1/36 | 1.00 | December 16, 2024 | 489.00 | | Bank of India Multi Cap Fund – Direct Plan | 11.51 | 2/36 | 0.92 | March 3, 2023 | 1,074 | | Tata Multicap Fund – Direct Plan | 9.71 | 3/36 | 0.64 | February 2, 2023 | 3,216 | | Mahindra Manulife Multi Cap Fund – Direct Plan | 9.68 | 4/36 | 1.58 | May 11, 2017 | 6,439 | | ITI Multi Cap Fund – Direct Plan | 9.63 | 5/36 | 1.23 | May 15, 2019 | 1,365 | | Union Multicap Fund – Direct Plan | 8.80 | 6/36 | 1.61 | December 19, 2022 | 1,329 | | ICICI Prudential Multicap Fund – Direct Plan | 8.33 | 7/36 | 0.92 | January 1, 2013 | 16,997 | | HSBC Multi Cap Fund – Direct Plan | 7.59 | 8/36 | 0.96 | January 30, 2023 | 5,500 | | PGIM India Multi Cap Fund – Direct Plan | 7.56 | 9/36 | 0.76 | September 10, 2024 | 418.00 | | WhiteOak Capital Multi Cap Fund – Direct Plan | 7.45 | 10/36 | 0.85 | September 22, 2023 | 3,421 |