Inflows into multi cap funds decline for five months 

By Kushan Shah

The multi-cap fund category has seen a declining interest in the recent months. According to data from the Association of Mutual Funds in India, the net inflows in the category has declined consistently for five consecutive months – from Rs 3,560 crore in September 2025 to Rs 1,995 crore in January 2026. 

The category’s investment mandate requires a minimum of 75% investment in equity and equity-related instruments and a minimum of 25% investment in each of large, mid and small cap segments. 

Madhu Nair, CEO, Union MF said that the category’s dip in net inflows reflects the negative investor sentiment in the mid and small cap segments in the last few months. He added that the category has suffered recently due to its higher allocation in mid and small cap segments (a minimum of 25% in each according to AMFI’s guidelines) which have underperformed. In addition, the general outlook of the industry has also favoured large cap leading to a flight towards the segment.

Nair, however, does see the tide turning soon. “The mid and small cap segments have seen growth in January which has led to a more favourable outlook towards categories with comparatively higher allocation in them. So, multi cap funds could see an increase in interest from the investors in the near future.“

Anupam Tiwari, head of equities, Groww MF also trusts in the category’s potential. While attributing the recent decline in inflows to a flight to safety of the large cap and the comparatively rigid allocation across market caps, he maintains that the category will see a revival in investor portfolios with better performance by small and mid cap. He further added that the category has the potential to become more popular than flexicap fund category over the long term in the next 10-15 years.

While the verdict of the investors on the category remains to be seen in the future months, it is worth noting that both the mid and small cap segments are now showing positive 3 and 6-month returns after considerable volatility in the recent past.