A mutual fund (MF) scheme’s worth can be assessed through a number of factors such as the category it falls under, past record of fund managers and that of mutual fund house, and importantly — the compound annual growth rate (CAGR) returns that the scheme has delivered over a period of time, among other factors.
Each factor, nevertheless, plays an important role in its own right, but the returns given by these schemes are considered vital by investors before they decide to invest in that scheme.
Here we cull out a few multi cap mutual funds that have given a CAGR return of more than 14 percent in the past ten years. But before digging deeper, we will explain what exactly are multi-cap mutual funds.
What are multi cap funds?
Multi cap funds invest in companies across market capitalisation: small cap, medium cap, or large cap. Unlike flexi-cap mutual funds where fund managers can choose any ratio of market segments, they are required to invest a minimum of 25 percent in each of these i.e., small cap, mid cap and large cap.
According to the latest Association of Mutual Funds in India (AMFI) data, there are a total of 17 multi cap mutual funds with a total assets under management (AUM) of ₹66,099 crore at the end of Jan 31, 2023.
These mutual funds witnessed an inflow of ₹1,773 crore in the month of January against ₹676 crore a month ago.
|Multi cap funds||10-year-returns (%)||Benchmark returns (%)|
|Quant Active Fund||20.31||14.92|
|Invesco India Multicap Fund||16.31||14.92|
|Sundaram Multi Cap Fund||14.67||14.92|
(Source: AMFI; regular returns as on Feb 20, 2023)
As one can in the table above, Quant Active fund gave a CAGR return of 20.31 percent in the past 10 years against the benchmark returns of 14.92 percent.
Invesco India Multicap Fund also gave a high CAGR return of 16.31 percent while the benchmark return was 14.92 percent. At the same time, Sundaram Multi Cap Fund delivered 14.67 percent return while the benchmark return was 14.92 percent.
Why should you invest?
Multi cap funds enable investors to make the most of each segment of mutual funds. While long term stocks give a sense of stability to investors, small and medium caps provide a potential of stock rally at the same time.
These funds aim to keep the risk lower by diversifying their portfolio across market segments. Consequently, they are considered less risky than capitalisation-weighted funds such as large caps, midcaps or small caps.