Top 5 Best Mutlicap Funds for Long Term Investments in India

Struggling to balance safety and growth between large caps and small caps? What if one fund could do it all for you? Yes, you heard it right? Multicap Mutual funds can elegantly solve your dilemma with its perfect combo of diversification in all market caps, large, mid and small. Regulated by SEBI, these funds invest at least 25% in each kind of company.

That is not all. Some multicap funds have even delivered returns of over 30% over time. Take the Nippon India Multi Cap Fund, for example, which has an AUM of Rs 47,294 crore. Other funds like ICICI Prudential, Mahindra Manulife, Invesco India and Kotak Multicap Fund are no less. With their expert management and consistent returns, these funds became the top 5 multicap funds in India in 2025.

Do you also want to invest in these top funds? Dive into this post to know what makes these best multicap funds stand out and why they could be your best pick in 2025.

What are Multicap Mutual Funds?

Multicap Mutual Funds are a category of Equity Mutual Funds that diversify their investments across companies of all market capitalizations, large, mid and small. These mutual funds diversify across sectors to benefit from them simultaneously, balancing risks and returns, such as large-cap investments for stability, mid-cap investments for growth potential and small-cap investments for potential upside.

These funds are regulated by SEBI (Securities and Exchange Board of India), which requires multicap funds to allocate a minimum of 25% of their assets to each of the three categories. This rule allows fund managers to adjust investments based on market conditions dynamically.

Let us see how these mutual funds work.

How do Multicap Funds Work?

The multicap funds follow a diversification strategy that says, within the 75% minimum equity allocation, the fund must allocate at least 25% to each market-cap stock. Fund managers can adjust these allocations beyond 25% based on market conditions.

For instance, during good economic conditions, the fund may invest more in mid and small-cap stocks for growth and in uncertain times, it may focus more on large-cap stocks for stability.

Investors can invest through SIP (Systematic Investment Plan) or lump sums. The fund's NAV (Net Asset Value) fluctuates daily with the market.

Pro Tip: Use a SIP Calculator and estimate the future returns of your SIP investment easily.

Now, let us look at the top 5 multicap funds for your long-term investments in 2025.

Top 5 Multicap Mutual Funds For Long Term in 2025

Here are the top 5 multicap funds and their returns for your investments in 2025 that will help with your wealth creation over time:

The mutual funds performed very well over 3-year and 5-year investment horizons. The category average for mutual funds remained at 18.08% over 3 years and 21.58% over 5 years. Meanwhile, the benchmark (Nifty 500 TRI) scored 16.57% over 3 years and 19.03% over 5 years.

Must Read: Top 10 Mutual Funds for SIP in 2025: Best Picks to Grow Wealth

Now, let us explore the benefits of investing in these mutual funds in 2025.

Benefits of Investing in Best Multicap Funds

Here are the benefits of investing in the best Multicap Mutual Funds for your long-term wealth creation in India:

• Diversification
  

  The biggest advantage of multicap funds is that they invest across all market caps (with a mandate to allocate at least 25% to each), providing stability and growth potential.

• Growth Potential
  

  These funds capture the growth opportunities in changing market conditions. When the market is growing, the fund can take advantage by investing in mid and small-caps and during a downturn, it can invest in large caps for stability.

• Management Style of Fund Managers
  

  These mutual funds are managed by experienced professionals who dynamically adjust asset allocation in response to market conditions, balancing risk to deliver optimal returns.

• A Single-Fund Solution
  

  For investors with no market expertise, multicap funds serve as an all-in-one equity fund, helping them simplify their investment strategy without the burden of doing their own research.

• Long-Term Wealth Creation
  

  If you plan to invest for at least 5 to 7 years, multicap funds can help you build long-term wealth. These funds grow through compounding and can help you manage short-term fluctuations.

Now, let us look at the factors you should consider before investing in the multicap funds.

Factors to Consider Before Investing in the Best Multicap Fund

Before investing in a multicap fund, you should consider the following factors to make smart investment decisions:

Factors for Aligning the Fund with Your Personal Financial Goals

• Multicap funds are suitable for investors with a long-term investment horizon (5-7 years or more), so define your goals and horizon.
• These funds carry a moderate to high risk profile, so align their risk with your tolerance before investing.
• Decide what role the multicap fund will play in your existing portfolio, it works best as a main equity holding.
• Understand the tax implications of multicap funds, as their gains are taxed under equity fund taxation rules. STCG is taxed at 15% and LTCG exceeding Rs 1 lakh is taxed at 10%.

Factors to Consider for Evaluating the Fund's Quality

• Review the fund manager's track record before finalising the fund.
• Check whether the fund has delivered consistent performance relative to its benchmark and peers.
• Pick a multicap fund with a lower expense ratio. These types of funds offer the potential for higher returns over time.
• Confirm that the fund you are choosing closely follows the rules of investing at least 25% in each market cap.
• Check the fund size (AUM)and liquidity. A fund with a massive AUM might face challenges in buying or selling stocks.

Now, the main question: "Why should you choose multicaps over other market caps?" Keep reading to know.

Why Choose Multicap Over Other Market Caps?

Multicap mutual funds offer many benefits, such as automatic diversification, balanced risk and consistent market exposure without the need for frequent rebalancing. The fund managers of multicap funds dynamically allocate assets to capitalize on trends and limit downside.

Let us compare multicap funds with other market caps to get a clear understanding:

Multicap funds are a good investment option for all types of investors, beginner or experienced, as they reduce the risk associated with a single sector. If you concentrate all your investments in one place and if that fund does not perform well, you will face a huge loss. Multicap funds prevent you from these losses. They take advantage of all market caps, such as growth in mid and small companies and stability from large companies, and make sure you get them too. These funds combine these features for stable, long-term growth, making them perfect for easy, diversified investing.

Also Read: Top 10 Flexi Cap Mutual Funds: High-Return Picks in India 2025

Now, let us explore which investors should put their bet on multicap funds.

Who Should Invest in Multicap Funds?

Here are the investor profiles who are highly suitable for investing in multicap mutual funds:

• Investor seeking diversification across all market capitalizations.
• Investors who want to continue their investments for a longer time period, at least 5-7 years.
• Individuals who are okay with a moderate to high risk level and potential market fluctuations.
• Investors who prefer a core equity holding.
• Individuals who can not actively manage or do research for their investments.
• For beginners new to equity investments with no expertise in market analysis.

Who Might Want to Avoid Them?

• Conservative investors who prioritize capital preservation over growth and cannot tolerate any volatility.
• Investors specifically targeting maximum returns and can take risks in their investments.

Conclusion

To conclude, the multicap mutual funds are suitable investments for people who want to build wealth over the long term in 2025. These mutual fund options work well for both new and experienced investors.

Some of the top multicap funds in India include Nippon India Multi Cap Fund, ICICI Pru Multi Cap Fund, Mahindra Manulife Multi Cap Fund, Invesco India Multi Cap Fund and Kotak Multicap Fund. These can be strong choices for your investment portfolio in 2025.

Related Blogs:

1. Top 5 Liquid Funds in India 2025: For Safe & Instant Returns 

2. Best SIP Plan for 20 Years: With Equity, Debt & Hybrid Funds

3. Best Mutual Funds to Invest in 2025: Low-Risk Options for High Return

FAQs

1. How do multicap funds differ from flexi-cap and single market cap funds?
   

   Multicap funds invest at least 25% in large, mid and small caps; flexi-cap funds have no fixed limits.

2. Are multicap funds tax-efficient?
   

   Yes, they enjoy long-term capital gains tax benefits if held for more than one year, like other equity funds.

3. What is the risk profile of multicap funds?
   

   Moderate to high risk due to exposure across stable large caps and volatile mid and small-cap stocks.

4. Can I invest in multicap funds through SIP?
   

   Yes, SIPs allow disciplined, gradual investing in multicap funds, ideal for long-term wealth creation.

5. Why are multicap funds suitable for long-term investments?
   

   They balance stability and growth by combining large caps with potential-rich mid and small caps, optimizing wealth growth.