One fund, many opportunities: The power of multicap investing

The correction in Indian equities since September 2024 has rattled many retail investors. Indian equities have witnessed a broad-based correction—triggered by expensive valuation in certain market segments, announcement of the reciprocal tariffs by the US administration, etc. leading to foreign capital outflows, concerns about the outlook for economic growth and a reset in earnings expectations.

However, for long-term investors with an eye on India’s structural growth story, it may be an opportune time to reposition portfolios. One product category that merits attention in the current backdrop is multi cap mutual funds. With their mandated exposure at least 25% each across large, mid, and small-cap stocks, these funds are well-aligned to capture the breadth of India’s economic revival—and offer a balanced path through market volatility.

For investors willing to look beyond the short-term noise, these corrections provide an opportunity to enter at relatively more attractive valuations. Multi cap funds are structurally positioned to take advantage of this reset.

India’s Growth Story: Beyond Just Blue Chips

Despite near-term headwinds, the Indian economy remains fundamentally strong. GDP growth for FY2026 is projected in the range of 6.5% (Source: RBI Monetary Policy Statement, April 2025) led by a combination of sustained demand from rural areas, an anticipated revival in urban consumption, increased government capital expenditure, private consumption, and industrial revival.

Crucially, this growth is not limited to the top 50 or 100 companies. Emerging sectors like electric vehicles, manufacturing under PLI, digital infrastructure, and tier-2 and tier-3 financial services, specialty chemicals are expected to see strong traction, many of which are represented by mid and small cap companies.

Multi cap funds offer investors a window to participate in this broad-based, bottom-up growth, alongside the stability of well-established large-cap firms.

Key to Risk-Adjusted Investing in a Volatile Environment

Amidst global trade wars and geopolitical tensions, market volatility is likely to persist. In such a scenario, asset allocation becomes key.

For equity investors, multi cap funds inherently balance risk and return by distributing exposure. While large caps offer downside protection, mid and small caps bring higher growth potential—creating a well-rounded equity allocation that can weather market cycles.

Investors looking to rebalance their equity portfolios, multi cap funds provide a ready-made core allocation. Rather than spreading investment across multiple single-cap funds, one multi-cap fund can deliver diversified exposure with active management oversight.

SIP or Lumpsum—Both Strategies Fit

Multi cap funds work effectively for both SIP and lumpsum investors. Through SIPs, investors benefit from rupee-cost averaging across varied segments, across market cycles. For those with lump sum capital to deploy after the recent correction, multi cap funds offer an intelligent way to avoid segment-specific timing risk.

One India. Many Opportunities. One Fund.

India’s growth story is not concentrated—it’s dispersed across market caps, sectors, and geographies. Multi-cap funds, by virtue of their mandate, mirror this dispersion and offer investors a comprehensive participation in India’s growth story.

(The author Farhad Gadiwalla is Executive Vice President & Head of Products at UTI AMC. Views are own)