Multi-cap vs multi-asset allocation mutual funds returns race: Key differences, 1, 3 and 5-year returns compared here
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.
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.
Multi-asset allocation funds: These are hybrid mutual fund schemes that invest across at least three asset classes, with a minimum allocation of 10% to each. Depending on the scheme's mandate, these asset classes may include equities, debt instruments, and commodities such as gold and silver, including through their exchange-traded funds (ETFs), REITs, etc.
Unlike multi-cap funds, which focus on equities across market capitalisations, multi-asset allocation funds diversify investments across asset classes. Their returns depend on the performance of these assets and the scheme's allocation to each of them.
| Fund category | 1-year returns | 3-year returns | 5-year returns |
| Multi-cap funds | 0.32% | 12.27% | 11.03% |
| Multi-asset allocation funds | 1.84% | 12.86% | 10.66% |
| Higher-returning category | Multi-asset allocation | Multi-asset allocation | Multi-cap |
*Source: Value Research, CAGR as on 16 October 2026, Category-Average Returns
The comparison shows that multi-asset allocation funds lead over the one-year period, with returns of 1.84% against 0.32% for multi-cap funds. They also lead over three years, returning 12.86% CAGR compared with 12.27% for multi-cap funds.
The trend reverses over five years. Multi-cap funds have returned 11.03% CAGR, ahead of the 10.66% recorded by multi-asset allocation funds.
The comparison highlights how the two categories can perform differently across investment horizons. Multi-cap funds maintain mandated exposure to large-, mid-, and small-cap equities, while multi-asset allocation funds spread investments across asset classes.
Sheetal Goel is a Content Producer at Livemint, where she covers corporate developments, personal finance, business trends, markets, and SEBI-related updates. She focuses on simplifying complex financial concepts and presenting them in a clear, reader-friendly manner, thereby helping audiences better understand investment trends, personal finance, and market developments. Her writing focuses on making finance more accessible to everyday readers while maintaining clarity, accuracy, and relevance. <br><br> She holds a degree in Economics (Hons.) along with an MBA in Finance, which has helped her develop a strong foundation in financial analysis, market understanding, and business reporting. Before joining journalism, she worked with finance and broking firms, where she closely followed market developments, investment strategies, and evolving industry trends. This practical exposure strengthened her understanding of financial markets. She has also written content across multiple formats and platforms, including YouTube, LinkedIn, and Instagram. <br><br> Over time, she has developed expertise in covering market-linked stories, investor-focused topics, and regulatory updates in a simplified yet informative style. She also enjoys reading and listening to Hindi poetry, reflecting her appreciation for literature and creative expression beyond the world of markets and numbers.
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