Nippon India Fund Outpaces SBI Fund with 26% CAGR
Overview
Nippon India Multi Cap Fund delivers a superior 26% 5-year CAGR, significantly outperforming SBI Multicap Fund's 18% over three years. This analysis explores their distinct investment strategies, risk profiles, and substantial AUM differences, guiding investors who can tolerate high risk in the demanding multi-cap segment.
Stocks Mentioned
Nippon India Fund Surges Ahead
Nippon India Multi Cap Fund has significantly outperformed its peer, SBI Multicap Fund, delivering a compelling 26% CAGR over five years. In contrast, SBI Multicap Fund posted an 18% CAGR over a three-year period. This performance disparity highlights differing strategic approaches within the inherently high-risk multi-cap fund category.
Regulatory Mandates for Multi-Caps
Multi-cap funds operate under strict guidelines, requiring a mandatory 25% allocation to large-cap, mid-cap, and small-cap equities each. This structure dictates a minimum 75% exposure to equities, with a substantial 50% concentrated in mid and small caps. Consequently, these funds demand a high-risk appetite and a long investment horizon, typically five years or more. Unlike flexi-cap funds, their market cap allocation remains fixed regardless of prevailing market conditions.
Nippon India's Diversified Strategy
Managing a considerable ₹50,048 crore AUM as of November 2025, Nippon India Multi Cap Fund, previously known as Reliance Equity Opportunities Fund, employs a high-conviction strategy. The fund diversifies across 131 stocks, with its top ten holdings accounting for 28.3%. Key investments include market leaders like HDFC Bank and Axis Bank, alongside significant allocations to banks, retailing, and pharmaceuticals. It primarily follows a buy-and-hold approach, emphasizing "growth at reasonable valuations."
SBI Multicap's Focused Approach
SBI Multicap Fund, with an AUM of ₹23,956 crore, utilizes a bottom-up approach, concentrating on growth stocks with a lean towards large-caps. It typically holds between 60-65 stocks, with the top ten constituting 33.3% of the portfolio. Prominent holdings include Kotak Mahindra Bank and HDFC Bank, supported by substantial sector exposure in banks, financial services, and consumer durables. The fund also explores opportunities in foreign securities and alternative investment vehicles like REITs and InvITs.
Risk-Adjusted Performance Metrics
Nippon India Multi Cap Fund's leading 26% CAGR is achieved with a standard deviation of 13.0, which is close to the category average. Its Sharpe ratio stands at 1.2 and the Sortino ratio at 1.8, indicating strong performance relative to the risk taken. SBI Multicap Fund exhibits lower risk with a standard deviation of 12.0. However, its Sharpe ratio of 0.9 lags behind, though its Sortino ratio of 1.4 offers some comfort regarding downside risk, reflecting lower overall risk-adjusted returns for its measured period.
Fund Management Expertise
Both funds are managed by experienced teams. Nippon India is overseen by Sailesh Raj Bhan, while SBI Multicap Fund is managed by Rama Iyer Srinivasan. Investors are reminded that past performance is not a guarantee of future results, and alignment with individual risk profiles and investment objectives is crucial before committing capital.
