Multi Cap Fund — Mutual Fund Term Explained

An equity fund required by SEBI to maintain at least 25% each in large, mid and small cap. Guarantees diversification across market caps.

Multi Cap funds must invest at least 75% in equities, with a mandatory minimum of 25% each in large cap, mid cap and small cap. This mandatory diversification was introduced by SEBI in 2020.

Related terms

• Flexi Cap Fund — An equity fund with no restriction on market cap allocation. The manager can invest freely across large, mid and small cap stocks.
• Small Cap Fund — A fund investing at least 65% in companies ranked 251+ by market cap. Highest return potential but most extreme drawdowns. Requires 10+ year horizon.
• Mid Cap Fund — A fund investing at least 65% in companies ranked 101-250 by market cap. Higher return potential than large cap but significantly more volatile.

Browse the full mutual fund glossary, or see this concept in action in the fund screener.