New Delhi, June 26 -- Multi Cap Funds have emerged as a distinct category within equity mutual funds by offering investors exposure across large-, mid- and small-cap stocks through a single scheme. Unlike investors who build diversified portfolios by combining multiple equity funds, Multi Cap Funds follow a mandated allocation strategy that ensures exposure to all three market segments.

The category has matured significantly over the past three years, with performance data highlighting meaningful differences between the best-performing and weaker schemes. It argues that the mandatory allocation framework provides investors with genuine diversification rather than allowing portfolios to drift towards a particular market-cap segment during...