Over the 21-year period from April 2005 to July 2026, the Nifty 500 Multicap 50:25:25 TRI delivered an annualised return of 15.53%, higher than the 13.99% return from large-caps and slightly lower than 15.79% for small-caps and 17.19% for mid-caps, according to a WhiteOak Capital study.
Multi-caps also saw lower volatility and drawdowns than mid- and small-caps. Annual volatility for multi-caps stood at 23.4%, compared with 28.7% for small-caps and 26% for mid-caps, though higher than 21.1% for large-caps. Similarly, multi-caps saw a drawdown of 66.8%, compared with 75.6% for small-caps and 72.9% for mid-caps, while large-caps had a lower drawdown of 61.1%.
ET BureauSector returns 15.5% annually with milder swings than in mid- and small-caps, shows a study
Wealth managers believe such schemes can reduce volatility while also taking market-cap timing decisions away from investors.
“It is difficult for investors to time entries and exits from one segment of the market to another. Multi-caps, which combine all segments, take away this worry and are also tax-efficient,” said S Shankar, founder of Credo Capital.
He said these funds help capture a significant portion of the return potential across market segments while avoiding high risk.
Multi-caps could also help manage retail investor behaviour during periods of market stress.
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“Investors often exit mid- and small-caps when drawdowns are large. A multi-cap fund helps manage investor behaviour better as it comes with lower drawdowns,” says Vishal Dhawan, founder and CEO, Plan Ahead Wealth Advisors.
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