Flexicap vs Multicap funds: Which mutual fund category should you choose?

Flexicap remains India’s largest equity mutual fund category by assets, but multicap funds have delivered stronger three- and five-year returns, according to Varun Fatehpuria, Founder and CEO of Daulat Finvest. The difference comes down to structure: flexicap fund managers have complete discretion over how much to hold across large, mid, and smallcaps, while multicap schemes must follow SEBI’s rule mandating a quarter of assets in each category. This makes multicap inherently more volatile but better positioned to capture small and midcap rallies, while flexicap tends to offer steadier, often largecap-tilted performance. Fatehpuria advises investors to avoid knee-jerk reactions to fund manager changes and consider multicap as a complementary addition to an existing flexicap holding.