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.