Flexi-cap vs multi-cap funds: Which has performed better over 3, 5 and 10 years?

For equity mutual fund investors, flexi-cap and multi-cap funds remain two of the most popular diversified categories. Both promise long-term wealth creation by investing across large, mid and small-cap stocks. But when it comes to actual returns, which category has done better over the last 3, 5 and 10 years?

A look at category averages and top-performing funds throws up an interesting picture—one that highlights the classic trade-off between growth potential and stability.

Category averages: Multi-cap leads on returns, flexi-cap on consistency

Flexi-cap funds (category average)

3-year return: 16.99% CAGR

5-year return: 15.54% CAGR

10-year return: 13.87% CAGR

Multi-cap funds (category average)

3-year return: 19.20% CAGR

5-year return: 18.88% CAGR

10-year return: 15.12% CAGR

This shows that multi-cap funds have benefited from higher exposure to mid- and small-cap stocks, especially during a favourable market phase over the last few years. Even over the long term, multi-cap funds have managed to stay ahead on average. However, numbers alone don’t tell the full story.

Returns Comparison: Flexi-cap vs Multi-cap Funds (Regular Plans)

(Source: Value Research)

Key takeaways:

Both flexi-cap and multi-cap funds have delivered strong long-term returns for investors.

Multi-cap funds have given higher average returns over 3, 5 and even 10 years, helped by higher exposure to mid- and small-cap stocks.

Flexi-cap funds have been more consistent, with several funds delivering steady returns across market cycles.

Investors seeking higher growth and willing to take more risk may consider multi-cap funds.

Those looking for stability and smoother long-term returns may prefer flexi-cap funds.

One-year performance: A reminder of volatility

The last one year has been a forgettable phase for both categories, reflecting volatility in equities—especially in mid- and small-cap stocks. Flexi-cap funds have delivered around 3% returns over the last year. Multi-cap funds have managed about 1.28% returns.

This underlines an important point – short-term returns can fluctuate sharply, even in diversified equity funds.

Flexi-cap vs Multi-cap: What’s the key difference?

Flexi-cap funds give fund managers complete freedom to move across market caps based on valuations and risk.

Multi-cap funds follow a fixed allocation structure, which can limit flexibility during volatile or uneven market phases.

Who should invest where?

Flexi-cap funds may suit investors looking for long-term consistency, lower volatility and smoother returns across market cycles.

Multi-cap funds may appeal to investors with a higher risk appetite, who are comfortable with volatility in exchange for potentially higher returns during strong market phases.

A word of caution for investors

While past performance helps in understanding fund behaviour, returns are not guaranteed. Market conditions change, and strategies that worked well in one cycle may not perform the same in the next. Investors should avoid chasing recent returns and instead focus on investment horizon, risk tolerance and asset allocation.

Summing up…

Both flexi-cap and multi-cap funds have proven their ability to create wealth over time. Multi-cap funds have delivered higher average returns, while flexi-cap funds have offered better consistency and predictability. Choosing between the two should depend less on recent rankings and more on how much volatility an investor is willing to handle and for how long they can stay invested.

Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.