Multi-cap Funds: Perks of the Venture

Multi-cap funds are basically diversified mutual funds which help maintain a diversified stock portfolio as it allows investors to put their money in stocks that range across a variety of market capitalisations. A multi-cap portfolio tends to comprise of small-call, mid-cap and large-cap stocks and as per mandate, demand investors to maintain minimum investments in equity-related instruments. With the categorisation of funds by SEBI, multi-cap funds are a hot favourite of the investors and financial advisors alike. It is probably galore of the benefits of investing in multi-cap funds that urges the investors to consider multi-cap funds as their choice of investment.

Reasons why an investor can consider multi-cap funds

Investors, who are looking for a suitable arena of investment with a time horizon of at least 5 years that will help them to tide over the blows of market volatility and will also offer compounding benefit, can consider putting their money in multi-cap funds.  It also saves them from the nail-biting tension of picking up individual stocks or choosing an ideal market capitalisation as per their needs. The following reasons further emphasise why an investor should consider multi-cap funds:

  • Flexibility: More than often investors are clueless if their share of small-cap, mid-cap or large-cap funds would do well; by putting their money in multi-cap funds investors avail the benefit of flexibility to switch their fund holdings among different cap-sizes on the basis of the market scenario, cost of stocks and their own goals.

  • Risk Factor:Investors can balance the risk and even out the blows of volatility through their investment in multi-cap funds. In the case of pure large-cap funds, investors need to have at least 80% of their total corpus in the top 100 stocks and around 65% of their total corpus in stocks of companies ranked 101-205. In the long run, multi-cap funds tend to harbour a weight of risk that is lesser than that of the burden of risk under pure small-cap or mid-cap funds.
  • Wealth Creation:Fund advisors deem multi-cap funds to be an ideal choice for wealth creation in comparison of the large-cap funds. The dynamic investment strategy of multi-cap funds enables investors to earn better returns to achieve their long-term financial goals. Those who are not in favour of lump sum investments can choose to put their money in multi-cap funds through the SIP route and stagger their investments to earn steady returns.

When investors invest in multi-cap funds they get rid of the dilemma that comes with picking out the most suitable investment category of funds and capital sizes. They fret over the pros and cons of each type of funds individually which confuses them further about their choice. With multi-cap funds, investors can diversify their investment portfolio and modify their investment proportions to meet their financial objective without being too confused about their choice of funds.Do you want to find out more about multi-cap investment and how to make the most of the different cap sizes? Consult our fund managers to avail a detailed picture.

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Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Past performance is not an indicator of future returns. Wealth Redefine is a AMFI registered Mutual Fund distributor – ARN - 167127

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