Multi-cap vs multi-asset allocation mutual funds returns race: Key differences, 1, 3 and 5-year returns compared here

Multi-cap and multi-asset allocation mutual funds follow different investment strategies. Multi-cap funds invest across large-, mid-, and small-cap stocks, while multi-asset funds diversify across asset classes. We compare their 1-, 3-, and 5-year returns to see which category leads.

Multi-cap funds and multi-asset allocation funds may sound similar, but they belong to different mutual fund categories and follow distinct investment strategies.

While multi-cap funds invest primarily in equities across companies of different market capitalisations, multi-asset allocation funds spread investments across multiple asset classes, including equities and debt.

Here is what investors need to know about the two mutual fund categories and how their returns compare.

What are multi-cap and multi-asset allocation funds?

Multi-cap funds: They are open-ended equity schemes that invest across large-cap, mid-cap, and small-cap stocks.

Under Securities and Exchange Board of India (SEBI) rules, these funds must invest at least 75% of their total assets in equity and equity-related instruments. They must allocate at least 25% of total assets each to large-cap, mid-cap and small-cap stocks.

This structure requires multi-cap funds to maintain exposure to all three market-capitalisation segments, rather than concentrating only on large-cap stocks. Their performance is therefore linked primarily to equity-market movements across these segments.