UTI Multi Cap Fund: An all-rounder fund across market cycles

Current market context

The equity market turned volatile after the Trump Administration imposed 50% tariffs on Indian exports to the United States. Though tariff worries dragged the market down, we did not witness a big drawdown as some were fearing. In the last few days, the market has made a smart recovery due to GST rate rationalization, which will come into effect from 22^nd September. India's Q1 GDP growth at 7.8% was a big positive surprise for the market. We may see a boost in consumption due to the upcoming festive season and reduction in GST rates. The correction over the last several months have moderated valuations have moderated from their peaks (see the chart below). In current market conditions, fund managers may find attractive investment opportunities across market cap segments in a multi cap strategy. Multi Cap funds emerge as a good option for investment for long term investors, leveraging the opportunities across market caps. In this article we will review UTI Multicap Cap fund which in the short time since its inception in May 2025 has been able to catch our attention.

Source: Advisorkhoj Research, as on 31^st August 2025

Why are Multi caps desirable now?

Different segments of the market outperform each other in different market conditions (see the chart below). Large caps usually outperform small and midcaps in bear markets. Midcap and small cap stocks tend to outperform in bull markets.

Source: National Stock Exchange, Advisorkhoj Research, as on 12.09.2025. Nifty 100 TRI represents large cap, Nifty Midcap 150 TRI represents midcap and Nifty Small Cap 250 TRI represents small cap stocks. Disclaimer: Past performance may or may not be sustained in the future

• Lower downside risks: The table below shows the 6 biggest drawdowns in the market in the last 20 years and the impact on various market capitalization segments. You can see that large caps are considerably less volatile than midcap and small cap stocks. Multicap funds can have 50% allocation to large caps.
  
  

  

  Source: National Stock Exchange, Advisorkhoj Research). Nifty 100 TRI represents large cap, Nifty Midcap 150 TRI represents midcap and Nifty Small Cap 250 TRI represents small cap stocks. Disclaimer: Past performance may or may be sustained in the future.



• Winners continually rotate among various sectors, making broad sector exposure an important factor to consider, when aiming to enhance opportunities.
  
  

  

  Source: UTI MF product presentation. Nifty Indices Limited. Large denotes Nifty 100 TRI Index; Mid denotes Nifty Midcap 150 TRI Index & Small denotes Nifty Smallcap 250 TRI,*Cables & Wires, #Home & Personal Care, $Oil Marketing Companies, ^Original Equipment Manufacturers. Data as on 30^th June 2025



• Potential of generating alphas: Large cap stocks have high percentage of institutional ownership, are more researched and therefore have better price discovery. Opportunities of alpha creation are higher in midcaps and small caps, which are less researched compared to large cap stocks. Multicap fund managers may be able to find quality mid and small cap stocks at attractive valuations, thereby creating alphas for investors over long investment horizons.


• Wealth has grown across all segments: Wealth has grown 2.4 to 4.9 times across all three market cap segments i.e. large cap, midcaps and small caps over the last 10 years. Though large caps have traditionally been favoured by retail investors, historical returns show the wealth creation of potential of equity as an asset class across all three market cap segments.
  
  

  

  Source: UTI MF, Bloomberg. Index Earnings are for the Financial Year 2014 & 2024. #Compound Annual Growth Rate. Past performance may or may not sustain in the future



• India Growth Story is for all segments: The long-term structural India Growth Story is not about any one market cap segment. The elements of the India Growth Story, Viksit Bharat, e.g. consumption growth, rising per capita income, Atmanirbhar Bharat / Make in India, shift from unorganized sectors to organized sectors, digitalization etc, spans across all three market cap segments and multiple industry sectors. Multicap funds are well positioned to capture the long-term growth opportunities in India's journey to Viksit Bharat. On achieving the goals set down in the graphic below, India is set to transform into a high-income, developed economy.
  
  

  

  Source: UTI MF, India @2047: Transforming India into a Tech-Driven Economy, Bain & Company. GDP in USD Trillion



• Diversification: Multicap Category, offers a well-diversified exposure across market caps
  
  

  

  Source: UTI MF; MFI Explorer. The chart above shows average market cap allocation of funds available in the industry under each category as on 30 May, 2025. Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investment.



• Outperformance of Multicap category: Over the long term, the Multicap category has outperformed the broad market index Nifty 500. (see the chart below)
  
  

  

  Source: UTI MF, MFI Explorer & Nifty Indices Limited. Data from April 01, 2005, to Jun 30, 2025.TRI denotes 'Total Return Index. Past performance may or may not be sustained in the future and shall not be used for comparison with other investments. The figures pertain to performance of the index and do not indicate the returns/performance of the scheme.* Compound Annual Growth Rate

UTI Multi Cap Fund Regular Growth

Launched in May 2025, the UTI Multi Cap fund is a diversified equity fund that taps into the potential of large, mid, and small-cap stocks. As per specifications laid down by SEBI, the scheme must maintain a minimum allocation of 25% of its total assets to each market capitalization category - Large Cap, Mid Cap, and Small Cap - allowing them to ride on the relative stability of large caps, the growth potential of mid-caps, and the high-growth opportunities in small caps. Whether the market moves up or down, a multi cap approach brings the benefit of diversification, and aims for long-term wealth creation. The fund is managed by Mr. Karthikraj Lakshmanan.

Investment Strategy of UTI Multi Cap Fund

• UTI employs a proprietary Score Alpha research methodology, companies get OCF & RoCE ratings based on their previous 5 years financials


• Companies are rated based on Operating Cash Flow (OCF) and Return on Capital Employed (RoCE).


• Coverage includes 458 companies across 23 sectors, ensuring comprehensive analysis.
  
  

  

  Source: UTI Product presentation

Current portfolio Construct

Source: UTI MF fund facts data as on 31^st July 2025

Why should you invest in the UTI Multi Cap Fund

Uniquely positioned: Distinct portfolio relative to broader market indices with higher mid & small cap exposure providing potential for higher returns in long-term

Disciplined strategy: A disciplined well-articulated strategy to be executed continuously through market cycles aimed at achieving both higher returns & stability

Optimal portfolio diversification: Stocks across sectors, sub-sectors, Styles (Growth & Value) and market capitalization

Leverage of research expertise: Large Research Team tracks the wide set of companies in order to identify the good stocks while weeding out the weaker ones

Who should invest in UTI Multi Cap Fund?

The UTI Multi Cap Fund may be suitable for investors who -

• are looking for long term capital appreciation.


• want to do investments predominantly across large cap, mid cap and small cap stocks


• have a high to very high-risk appetite.