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Mutual funds have gained significant attention in India over the past few years. Many investors prefer mutual funds because they offer the potential for higher returns. Mutual funds not only help us achieve our long-term wealth goals, but they also assist us in gradually beating inflation.
Since mutual funds now make up a large portion of our portfolio, we must understand how to invest in them successfully to make the best decisions and build the portfolio we want.
Therefore, equities mutual funds are the first category that comes to mind when considering the long term or beating inflation.
When we look at equity mutual funds in a much bigger perspective, we know that they have several sub-categories, and two, in particular, are Multi-Cap Funds and Flexi-Cap Funds.
Let’s understand these one by one.
What is Multi Cap Fund?
Multicap funds invest their corpus in a portfolio of equity with a range of market capitalizations, as the name implies.
Thus, a multi-cap fund contains investments in large-cap, small-cap, and mid-cap businesses. The Multi-Cap Fund category is a fantastic alternative to meet your risk tolerance because every plan invests in different percentages.
What is a Flexi Cap Fund?
A Flexi-Cap Fund is an open-ended, flexible equity strategy, according to SEBl's disclosure. It invests in companies of any market value, including large, midsize, and small-cap companies. The Fund Manager of Flexi-Cap mutual funds must invest at least 65% of the scheme's total assets in equity.
What are the Major Differences Between Multi-Cap Funds & Flexi-Cap Funds?
| Feature | Multi-Cap Funds | Flexi-Cap Funds |
| Strategy | Fixed & Disciplined | Dynamic & Flexible |
| Equity Exposure | Min. 75% in stocks | Min. 65% in stocks |
| Mandatory Allocation | 25% each in Large, Mid, & Small Caps | No fixed mandate (0% to 100% in any) |
| Manager Control | Restricted by the 25% rule | Full freedom to move assets |
| Risk Profile | Higher (due to forced Small-cap exposure) | Variable (depends on manager's view) |
| Feature | Multi-Cap Funds | Flexi-Cap Funds |
| Risk Level | Higher. Constant exposure to Mid/Small caps adds volatility. | Moderate. Manager can shift to Large-caps to lower risk. |
| Ideal Investor | Aggressive investors seeking high long-term growth. | Conservative to Moderate investors seeking stability. |
| Time Horizon | 5 - 7 Years (Long term) | 5 Years (Medium to Long term) |
| Key Benefit | Disciplined Growth: You are always invested in the "Next Giants." | Adaptability: Portfolio rebalances automatically based on the market. |
| Best For... | Beating the index via Small-cap exposure. | Balancing returns with lower volatility. |
Examples of Returns of Few Flexi Cap & Multi Cap Mutual Funds (Lump sum investment):
(As on 26.12.2025)
| Multi-Cap Funds | Returns (p.a.) | Flexi-Cap Funds | Returns (p.a.) |
| Nippon India Multi Cap | 25.36% | HDFC Flexi Cap | 23.84% |
| Mahindra Manulife Multi Cap | 21.60% | Quant Flexi Cap | 22.41% |
| ICICI Pru. Multi Cap | 20.05% | Bank of India Flexi Cap | 21.02% |
| Baroda BNP Paribas Multi Cap | 19.27% | JM Flexi Cap | 20.37% |
Source: ET Money
Conclusion
This blog discussed the key differences between Flexi Cap and multi-cap funds. We hope the information provided will help you better understand both funds.
Both Multi-Cap and Flexi-Cap Funds offer portfolio diversification. However, you should consider them only if they fit your financial goals, risk tolerance, and investment timeline.
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