ICICI Prudential Multicap Fund has offered positive returns in the last 10 calendar years, an analysis by ETMutualFunds showed. Since the calendar year 2016, this multicap fund has never delivered negative annual returns till 2025.
Launched on October 1, 1994, this multi cap fund is given four star rating by Value Research and Morningstar both.
Based on the annual returns for the last 10 years, the fund has offered the highest positive return of 36.38% in 2021, followed by 35.38% in 2023. The lowest positive return offered was 0.21% in 2018.
SIP and lumpsum investments
If an investor invested Rs 10,000 monthly through SIPs in this fund at the time of inception, the current value of the investment would have been Rs 11.01 crore now with an XIRR of 16.98%.
If the same SIP investment was made 10 years ago, the value would have been Rs 27.05 lakh with an XIRR of 15.74%. In the last five years, the value of this investment would have been Rs 8.66 lakh with an XIRR of 15.15%. In the last three years, the value would have been Rs 4.19 lakh with an XIRR of 10.79%.
A lumpsum investment of Rs 1 lakh made in this fund at the time of inception would have been Rs 82.97 lakh with a CAGR of 14.96%. In the last 10 years, the value of this lumpsum investment would have been Rs 4.03 lakh with a CAGR of 14.97%.
In the last three years, the value of this investment would have been Rs 1.68 lakh with a CAGR of 18.87%. In the last five years, the value of this lumpsum investment would have been Rs 2.09 lakh with a CAGR of 15.95%.
What does fund manager say about the fund?
Lalit Kumar, Senior Fund Manager : In the Multicap Fund, we follow a cyclical framework to identify sectoral overweight and underweight opportunities. During the period, our overweight positions in capital goods and metals contributed positively as these sectors performed well.
At the same time, our underweight stance on IT, FMCG, and select mega-cap stocks also aided alpha generation. The combination of sector allocation and disciplined portfolio positioning helped enhance the fund's relative performance, Kumar said.
Multicap structure versus fund manager's stock-selection strategy
Rajesh Minocha, a Certified Financial Planner (CFP), Founder of Financial Radiance told ETMutualFunds that ICICI Prudential Multicap Fund’s stability results from disciplined portfolio management and the inherent diversification of a multicap structure.
“The mandated allocation of a minimum of 25% to each large, mid, and small cap ensures exposure to various market segments and the fund manager’s stock selection and risk management have contributed to consistent performance across market cycles.”
Minocha further said that the multicap mandate provides the base, but stock picking, sector shaping, and disciplined risk management are what actually set the fund apart from many peers that operate under the same basic structure.
On the basis of trailing returns, the fund has outperformed its category average and benchmark in the shorter as well as longer horizons. In the last three months, the fund delivered a return of 5.10% compared to 1.16% by the benchmark (Nifty500 Multicap 50:25:25 - TRI) and 2.34% as the category average.
In the last six months, the fund delivered a return of 3.80% compared to a loss of 3.33% by the benchmark and a loss of 2.30% as the category average. The fund posted a return of 5.69% in the last one year compared to 0.51% by the benchmark and 1.86% as the category average.
In the last three years, the fund delivered a return of 18.86% against 15.94% by the benchmark and 16.36% as the category average. In the last five years, the fund gave 16.15% against 14.20% by the benchmark and 14.32% as the category average. Since its inception, the fund has delivered a CAGR of 14.96%.
Also Read | Every mutual fund offers positive XIRR on SIP investments in 5 years. Did you exit too soon?
Can fund maintain similar consistency going forward?
Minocha said a decade without a negative calendar year is notable, but investors should not assume this trend will continue indefinitely. He further said that the current market valuations remain elevated, which may lead to more moderate returns in the future.
Diversification should help manage volatility, but occasional negative years are possible and it is important to focus on long-term wealth creation rather than expecting consistent short-term results, the expert further said.
Being a multi cap fund, the fund holds 31.88% in large caps, 35.31% in mid caps, 5.28% in others, and 27.54% in small caps. In comparison to the multi cap category, the fund is overweight on mid caps and others.
Multi cap vs flexi caps
Multicap funds are required to invest at least 25% each in large-, mid-, and small-cap stocks, ensuring balanced exposure across market segments whereas flexicap funds, on the other hand, have complete flexibility to increase or reduce allocations depending on market opportunities and valuations.
With both the categories investing across market capitalisations, which category is more suitable for long-term investors in a volatile market? Minocha said that in volatile markets, multicap funds offer built-in diversification across market capitalisations. However, flexicap funds currently provide greater flexibility, allowing managers to adjust allocations based on valuations and opportunities.
He further said that the large-cap funds are typically better suited for those seeking downside protection, while mid-cap funds offer higher growth potential with increased risk; if you are an investor looking for a “set-and-forget” diversified equity setup, multicap funds still look pretty appealing but if you prefer the fund manager to dynamically tweak market-cap exposure based on valuations, then flexicap funds may have a slight edge right now. Ultimately, your choice should align with your risk tolerance and investment objectives, rather than relying solely on past performance.
This multi cap fund has the highest allocation in finance of around 13.69%, followed by 12.10% in capital goods. The fund had 11.02% and 10.34% in automobile and ancillaries and chemicals.
Risk ratio parameters of fund
The PE and PBV ratio of the flexi cap fund were recorded at 43.11 times and 7.53 times respectively whereas the dividend yield ratio was recorded at 0.96 times as of April 2026.
ETMutualFunds analysed the other key ratios of the fund in a three year period. Based on the last three years, the scheme has offered a Treynor ratio of 1.50 and an alpha of 0.30. The sortino ratio of the scheme was recorded at 0.68.
The return due to net selectivity was recorded at 0.27 and return due to improper diversification was recorded at 0.03 in the last three years.
Around nine multicap funds have completed five years of existence in the market. Out of these, Nippon India Multi Cap Fund gave the highest return of around 19.21% in the last five years, followed by ICICI Prudential Multicap Fund which gave 16.15% returns. ITI Multi Cap Fund gave the lowest return of around 11.70% in the same period.
Choose multi cap funds?
Minocha said that multicap funds remain a strong option for investors seeking diversified equity exposure without managing multiple holdings, especially over investment horizons of five years or more. In the next three to five years, performance is likely to be driven more by earnings growth than by valuation expansion.
He further said that investors should moderate their expectations, as recent strong returns may not be repeated and nevertheless, these funds are well positioned to capture opportunities across large, mid, and small-cap companies, making them a solid core component of an equity portfolio.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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