Should you consider multi-cap funds as a smart bet to navigate market turbulence?

Indian equity markets have come under pressure in recent weeks, largely weighed down by a sharp correction in IT stocks after the United States announced plans to impose a steep US$100,000 fee on H-1B visa applications. The development has spurred foreign portfolio investors (FPIs) to pull money out of Indian equities. In September 2025 alone, FPIs withdrew Rs 79.45 billion, taking the total net outflow for the year to Rs 1.38 lak crore. Analysts note that the trend reflects heightened global risk aversion, driven by persistent geopolitical tensions and broader macroeconomic uncertainties.

Despite the volatility, certain sectors, particularly infrastructure and energy, have displayed resilience, offering some stability in an otherwise shaky market. Market experts suggest that against such a backdrop, diversification across market segments has become crucial for investors.

Multi-cap funds, which allocate assets across large, mid, and small-cap companies, are gaining attention as a tool to mitigate sectoral risks while ensuring exposure to growth opportunities. By balancing cyclical and structural themes, these funds allow investors to withstand market swings while staying invested in high-potential areas.

Industry data shows that several multi-cap funds have delivered returns surpassing category averages and benchmark indices over three, five, and ten-year periods. Their portfolios, often spread across 40 to 80 stocks, have demonstrated the ability to navigate volatility while maintaining long-term growth trajectories.

Among the top-performing schemes are:

Axis Multi Cap Fund, with assets of ₹83.29 billion as of August 2025, has delivered a three-year rolling CAGR of 24.18%. The scheme is tilted towards banking, healthcare, and automobiles, with major holdings in HDFC Bank, ICICI Bank, and Reliance Industries.

Nippon India Multi Cap Fund, managing ₹462.16 billion, has posted rolling CAGR returns of 22.6% and 25.51% over the past three and five years, respectively. Its portfolio has strong allocations to banks, capital goods, and finance, with significant weightage in HDFC Bank and Axis Bank.

ICICI Prudential Multi Cap Fund, with assets worth ₹152.81 billion, has reported rolling CAGR returns of 19.86% and 20.85% over the last three and five years. The scheme maintains a diversified mix across financials, energy, and healthcare, with ICICI Bank and Infosys among its top holdings.

Advisors highlight that systematic investment plans (SIPs) in such funds enable investors to average out entry costs and build wealth steadily across cycles. With the Indian market navigating sectoral churn and global headwinds, multi-cap funds are increasingly being viewed as balanced vehicles that combine risk management with long-term growth potential.

Top multi-cap funds 

Recent data highlights notable trends in the performance of multi-cap funds, which invest across large, mid, and small-cap companies to balance risk and opportunity.

Over the one-year period, the standout performer has been Motilal Oswal Multi Cap Fund – Direct Plan, delivering a return of 9.33%, significantly ahead of peers. Other funds such as WhiteOak Capital Multi Cap Fund – Direct Plan and Mirae Asset Multicap Fund – Direct Plan also recorded positive returns of 3.87% and 1.52%, respectively, despite the broader volatility in equity markets.

For the three-year horizon, a few funds demonstrated consistent strength, outpacing both category averages and benchmarks. Axis Multicap Fund – Direct Plan posted a robust rolling CAGR of over 24%, reflecting disciplined stock selection and balanced sectoral allocation. Nippon India Multi Cap Fund – Direct Plan and ICICI Prudential Multi Cap Fund – Direct Plan also featured prominently, offering investors a solid mix of risk-adjusted growth.

Timeframe     | Fund Name                                 | Return (%)
---------------|-------------------------------------------|-----------
 1 Year        | Motilal Oswal Multi Cap Fund - Direct Plan |   9.33
               | WhiteOak Capital Multi Cap Fund - Direct   |   3.87
               | Mirae Asset Multicap Fund - Direct Plan    |   1.52
               | SBI Multicap Fund - Direct Plan            |   0.35
               | PGIM India Retirement Fund - Direct Plan   |   0.32
---------------|-------------------------------------------|-----------
 3 Year        | Axis Multicap Fund - Direct Plan           |  24.18
               | Nippon India Multi Cap Fund - Direct Plan  |  22.60
               | ICICI Pru Multi Cap Fund - Direct Plan     |  19.86
               | Bandhan Multi Cap Fund - Direct Plan       |  19.84
               | Aditya Birla SL Multi-Cap Fund - Direct    |  18.83