Highest Return Mutual Funds in the Last 10 Years – Multi Cap Fund Category

October 22, 2024 Mutual Fund

Multi Cap Funds are equity mutual funds designed to maintain a balanced exposure between large-cap, mid-cap, and small-cap stocks, ensuring a diversified portfolio across different market capitalisations.

Though Multi Cap Funds have existed for many years now, the category underwent a change in definition a few years ago. Earlier, in the absence of any restriction on the market cap allocation, most Multi Cap Funds held a predominantly large-cap biased portfolio along with strategic allocation to mid-cap and small-cap stocks.

In September 2020, SEBI introduced new regulations under which it mandated Multi Cap Funds to allocate at least 25% of their assets each in large-cap, mid-cap, and small-cap stocks. This was done to ensure the schemes are true to name and to prevent over-concentration in any single market segment. Fund managers have the flexibility to adjust their portfolios within these limits based on market conditions and opportunities.

[Read: Flexi Cap Funds v/s Multi Cap Funds: Which Is Better at a Market High?]

Multi Cap Funds offer a blend of growth potential from mid-cap and small-cap stocks and stability from large-cap investments. This balanced approach caters to various investor preferences and risk tolerances.

In this article, explore the highest returns Multi Cap Funds in the last 10 years, selected based on SIP returns.

Highest Return Multi Cap Fund in the last 10 years #1: Quant Active Fund

Launched in March 2001, Quant Active Fund is a Multi Cap Fund that follows a quant-based investment strategy to identify attractive opportunities across market caps and sectors. Quant Active Fund employs a momentum-driven investment approach, continually seeking attractive investment opportunities, leading to frequent adjustments at the stock and sector levels. This strategy has generated impressive alpha in recent years, rewarding investors handsomely.

The fund is sector and benchmark agnostic, meaning its portfolio weights are guided by market outlook rather than index weightage. Although Quant Active Fund was an average performer in the past, it experienced a significant turnaround in recent years driven by its in-house risk mitigation and predictive analysis tool viz. VLRT, which focuses on the valuation, liquidity, risk, and timing of investment.

Performance Quant Active Fund

Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory
Data as of October 17, 2024
Returns are XIRR in percentage. Monthly SIP of Rs 10,000 over a 10-year period in Direct plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN) 

In the last 10 years, Quant Active Fund grew at an XIRR of 24.4% compared to a growth of 17.9% in the Nifty 500 – TRI. A monthly SIP of Rs 10,000 over a 10-year period (i.e. total investment of Rs 12,00,000) in the fund would now be valued at Rs 43,70,110.

Top holdings of Quant Active Fund

Portfolio data as of September 30, 2024
(Source: ACE MF, data collated by PersonalFN) 

Quant Active Fund usually holds 45-60 stocks in its portfolio. As of September 30, 2024, Quant Active Fund held 45 stocks in the portfolio with the top 10 stocks accounting for about 44% of its assets. It also had some exposure to Derivatives – Futures. Reliance Industries, Aurobindo Pharma, Steel Authority of India, ITC, and Jio Financial Services currently form part of the fund’s top allocation. The fund’s top holding witnesses frequent changes. Only a handful of stocks, such as Reliance Industries, Aurobindo Pharma, Aegis Logistics, ITC, and Jio Financial Services have constantly found a place among the prominent contenders in the fund’s portfolio.

Highest Return Multi Cap Fund in the last 10 years #2: Nippon India Multi Cap Fund

Launched in March 2005, Nippon India Multi Cap Fund is a Multi Cap Fund that has recorded strong performance over the years through its diversification and risk mitigation strategies, and staying put on some of its high conviction bets despite disappointment in the short term. The fund aims to seek both growth and value stocks that are likely to benefit from the growth in the economy, with a special focus on high ROE companies.

The fund has done well and flourished under the supervision of Mr Shailesh Raj Bhan, who aims to identify high-growth potential and fundamentally sound stocks across industries that are available at reasonable valuations. Nippon India Multi Cap Fund prefers to avoid momentum-driven bets and focuses on high-conviction long-term bets. It emphasises building a portfolio comprising a combination of market leaders, sustainable alpha creators, and emerging/niche themes.

Performance Nippon India Multi Cap Fund

Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory
Data as of October 17, 2024
Returns are XIRR in percentage. Monthly SIP of Rs 10,000 over a 10-year period in Direct plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN) 

In the last 10 years, Nippon India Multi Cap Fund grew at an XIRR of 22% compared to a growth of 17.9% in the Nifty 500 – TRI. A monthly SIP of Rs 10,000 over a 10-year period (i.e. total investment of Rs 12,00,000) in the fund would now be valued at Rs 38,34,072.

Top holdings of Nippon India Multi Cap Fund

Portfolio data as of September 30, 2024
(Source: ACE MF, data collated by PersonalFN) 

Nippon India Multi Cap Fund usually holds a large number of stocks in its portfolio. As of September 30, 2024, the fund held 113 stocks, with the top 10 stocks accounting for around 31% of its assets. Names like HDFC Bank, ICICI Bank, Linde India, Infosys, and Axis Bank currently figure among its top portfolio holdings. Nippon India Multi Cap Fund has a long tail of over 85 stocks having an allocation of less than 1% in each, which collectively accounted for around 41% of its assets. Notably, many of these small-exposure stocks have been in the portfolio for well over a year now. Though Nippon India Multi Cap Fund usually has a low turnover ratio of around 20-30%, it does not hesitate to churn a portion of the portfolio to benefit from sector/stock-specific opportunities.

Highest Return Multi Cap Fund in the last 10 years #3: Invesco India Multicap Fund

Launched in March 2008, Invesco India Multicap Fund is the erstwhile Invesco India Mid and Small Cap Fund. The fund earlier invested predominantly in small-cap and mid-cap stocks along with substantial exposure to large caps. It now maintains an on-par exposure across market caps to align with SEBI’s updated definition for Multi Cap Funds. The fund aims to identify well-established companies and those with scalable business models having long-term growth potential.

Its emphasis is on the bottom-up approach to select stocks across the market capitalization range with no sector bias. The fund has outpaced the category average on multiple occasions in the past, which has helped it build a noteworthy long-term track record.

Performance Invesco India Multicap Fund

Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory
Data as of October 17, 2024
Returns are XIRR in percentage. Monthly SIP of Rs 10,000 over a 10-year period in Direct plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN) 

In the last 10 years, Invesco India Multicap Fund grew at an XIRR of 20.7% compared to a growth of 17.9% in the Nifty 500 – TRI. A monthly SIP of Rs 10,000 over a 10-year period (i.e. total investment of Rs 12,00,000) in the fund would now be valued at Rs 35,69,603.

Top holdings of Invesco India Multicap Fund

Portfolio data as of September 30, 2024
(Source: ACE MF, data collated by PersonalFN) 

Invesco India Multicap Fund invests in about 60-70 stocks. As of September 30, 2024, the fund held 61 stocks in the portfolio with the top 10 stocks accounting for around 27% of its assets. Its top exposure is in large-cap names such as ICICI Bank, Infosys, Trent, Tata Consumer Products, and Cholamandalam Investment & Finance Co., among others. The fund has restricted allocation in each mid and small-cap stock to under 2% to reduce liquidity and concentration risk. It usually records a moderate portfolio turnover of around 50-70%. Sectorwise, the fund has shown preference for Finance, Infotech, Pharma, Engineering, Retail, Auto & Ancillaries, and Banking sector.

Highest Return Multi Cap Fund in the last 10 years #4: Baroda BNP Paribas Multi Cap Fund

Baroda BNP Paribas Multi Cap Fund aims to create a diversified portfolio across different market caps by blending growth and value investment styles. It focuses on companies with strong cash flow and solid balance sheets available at reasonable valuations. Launched in September 2003, the fund has consistently maintained a lead over the broader Nifty 500 – TRI benchmark across most time frames, but has occasionally lagged the category average by a notable margin.

Baroda BNP Paribas Multi Cap Fund holds most of its stocks with a short-term view and makes frequent adjustments to the portfolio at the stock and sector level. Consequently, it has recorded a substantial portfolio of around 90-125% in the last one year. It has shown notable performance in the last couple of years, managing to limit downside risk during the 2020 market crash and performing well in the ongoing bull phase.

Performance Baroda BNP Paribas Multi Cap Fund

Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory
Data as of October 17, 2024
Returns are XIRR in percentage. Monthly SIP of Rs 10,000 over a 10-year period in Direct plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN) 

In the last 10 years, Baroda BNP Paribas Multi Cap Fund grew at an XIRR of 20.7% compared to a growth of 17.9% in the Nifty 500 – TRI. A monthly SIP of Rs 10,000 over a 10-year period (i.e. total investment of Rs 12,00,000) in the fund would now be valued at Rs 35,33,813.

Top holdings of Baroda BNP Paribas Multi Cap Fund

Portfolio data as of September 30, 2024
(Source: ACE MF, data collated by PersonalFN) 

Baroda BNP Paribas Multi Cap Fund invests in about 60-65 stocks ranging across diverse sectors. It has limited exposure in each stock to under 5%. As of September 30, 2024, the fund held 61 stocks in its portfolio with the top 10 stocks accounting for around 26% of its assets. Its current top exposure is in large-cap names such as ICICI Bank, HDFC Bank, Reliance Industries, and Zomato, along with a few small-cap names such as Mrs Bectors Food Specialities and Jyoti CNC Automation. In terms of sector, the fund has significant exposure to Banking & Finance and Infotech, along with investments in Engineering, Pharma, Auto & Ancillaries, Consumption, and Retail, among others.

Highest Return Multi Cap Fund in the last 10 years #5: ICICI Pru Multicap Fund

ICICI Prudential Multicap Fund holds the distinction of being the longest-running scheme in the Multi Cap Fund category having been launched in October 1994. The fund has delivered decent risk-adjusted returns over the long term by following a blend of growth and value investing strategies to select high-conviction stocks across market capitalisations.

The fund has the flexibility to select investments from a broad universe of stocks without any sector bias, which enhances its potential to generate high alpha over the long run. Supported by a prudent investment process and a stable fund house, the fund has shown improved performance in recent years. Additionally, it is managed by veteran fund manager Mr Sankaran Naren, known for his high-conviction value-oriented and contra bets, which boosts confidence in the fund’s long-term performance.

Performance ICICI Pru Multicap Fund

Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory
Data as of October 17, 2024
Returns are XIRR in percentage. Monthly SIP of Rs 10,000 over a 10-year period in Direct plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN) 

In the last 10 years, ICICI Pru Multicap Fund grew at an XIRR of 20.7% compared to a growth of 17.9% in the Nifty 500 – TRI. A monthly SIP of Rs 10,000 over a 10-year period (i.e. total investment of Rs 12,00,000) in the fund would now be valued at Rs 34,55,480.

Top holdings of ICICI Pru Multicap Fund

Portfolio data as of September 30, 2024
(Source: ACE MF, data collated by PersonalFN) 

ICICI Prudential Multicap Fund typically holds a highly-diversified portfolio of around 100-120 stocks. As of September 30, 2024, the fund held 122 stocks in the portfolio with the top-10 stocks accounting for around 28.5% of its assets. ICICI Bank has been the fund’s top stock with a 5% plus allocation for quite some time now. All other stock holdings in the portfolio usually have an allocation of 5% or less. The other core holdings in the portfolio include popular large-cap names like HDFC Bank, Reliance Industries, Axis Bank, and Infosys. Notably, the fund has a long tail of about 100 stocks having an allocation of less than 1% in each. The fund’s portfolio turnover has ranged between 85-95% in the last one year, signifying occasional churning of the portfolio.

Final thoughts…

With substantial exposure across the investment universe, Multi Cap Funds can potentially generate superior returns for investors in the long run without any concentration risk.

However, it is important to note that despite their diversification, Multi Cap Funds are not immune to market volatility. If the volatility in the equity market intensifies in the coming months, which is likely, stocks in the mid-cap and small-cap segments may face liquidity constraints and high volatility. In other words, if the bullish momentum fizzles out and the market witnesses correction, Multi Cap Funds register a high drawdown. That said, the presence of large caps in the portfolio can offset some of the volatility.

Investors should carefully consider their risk tolerance and investment goals before investing, and a gradual approach through a Systematic Investment Plan (SIP) might be prudent.

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Note:  This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Registration granted by SEBI, Membership of BASL and certification from NISM no way guarantee performance of the intermediary or provide any assurance of returns to investors.

The securities quoted are for illustration only and are not recommendatory.

This article first appeared on PersonalFN here