These mutual funds can invest in equities across market capitalizations since they are diversified. These funds must invest a minimum of 65% of their assets in equities and equity-related products in order to comply with regulatory requirements. Their holdings include largecap , midcap, and smallcap stocks.

Investment experts suggest multi-cap funds because of the versatility they give in terms of investing style. These funds blend largecap, midcap, and smallcap company equities. The returns from large-cap funds are typically steady and moderate. They can tolerate a market downturn better because of this. When there is a bull run, though, they could underperform. Mid-cap mutual funds have higher risk. But in a bull market, they may offer substantial gains. The opposite end of the investing spectrum is represented by small-cap funds. They have the potential to yield extremely substantial profits. In a recession, however, they are also extremely susceptible to losses.