Multi-cap and flexi-cap funds give investors exposure to large-, mid-, and small-cap stocks, but their investment mandates differ significantly. While flexi-cap funds can move across market capitalisations without a fixed allocation, multi-cap funds must invest at least 25% each in large-, mid-, and small-cap stocks.<\/p>\n
As per the latest SEBI Handbook of Statistics (2025-26), both categories recorded comparable net inflows in FY25. However, the trend diverged sharply in FY26, with multi-cap fund inflows declining to \u20b933,217 crore, while flexi-cap fund inflows surged to \u20b989,213 crore.<\/p>\n
This means that flexi-cap funds received 2.69x more inflows than multi caps in FY26. Here's what experts have to say on this.<\/p>\n
Sriram BKR, Senior Investment Strategist, Geojit Financial Services, explained that investor risk perception could have played a key role.<\/p>\n
He noted that multi-cap funds carry exposure to mid- and small-cap stocks, unlike flexi-cap funds, which \u201cgenerally have a tilt towards large-cap stocks\u201d.<\/p>\n
Source: Geojit Financial Services, 1-Year Average Returns ending March (FY returns)<\/p>\n
Based on the data shared by Geojit Financial Services, BKR explained that \u201ccategory-average returns did not show a significant difference between the two categories in FY26, particularly over the short term, which often influences investor decisions.\u201d<\/p>\n
However, FY24 saw relatively modest inflows but strong returns of 46.14% for multi-cap funds and 39.13% for flexi-cap funds. Across all these years, multi-cap funds gave better returns than flexi-caps.<\/p>\n
Siddharth Maurya, Managing Director, Vibhvangal Anukulara Pvt Ltd, explained that the divergence in FY26 flows reflected \u201cinvestor preferences rather than simply investors following the path of the highest returns\u201d.<\/p>\n
\u201cThe greater flexibility to adjust the extent of exposure to different market capitalisations is a key reason why flexi-cap inflows rose in FY26,\u201d Maurya said, citing concerns around volatility and elevated valuations in a recent year.<\/p>\n
BKR mentioned that awareness of the two categories has increased since their distinct categorisation in 2021. Investors with higher risk tolerance and return expectations may prefer multi-cap funds because of their mandatory mid- and small-cap exposure.<\/p>\n
He further noted that between \u201cMarch 2022 and March 2026, multi-cap funds' AUM grew 3.65 times, compared with 2.24 times for flexi-cap funds\u201d.<\/p>\n
From a diversification and exposure perspective, BKR suggested that multi-cap \u201ccan be a better choice\u201d for investors with a 5- or 10-year horizon, rather than holding both.<\/p>\n
Maurya explained that a flexi-cap can serve as a \u201ccore diversified equity investment\u201d for investors who want the fund manager to choose opportunities across market caps. However, multi-cap funds suit investors seeking disciplined exposure to all three segments irrespective of the market cycle.<\/p>\n
Both categories can be held, he added, but \u201conly one is required\u201d because their underlying stocks can overlap.<\/p>\n