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How Risky is it to Invest in Multi Cap Funds?

Mutual Funds66 views

Highlights

  • Gives the new investors a taste of investing in mid cap and small cap funds without exposing them to much risk
  • Some multi cap funds have generated 5 -year return upto 15%

Multi Cap funds invest in the stocks of companies with varied market capitalization – large cap, midcap and small cap companies. Multi cap funds are known for its diversity. Wherever there is diversification in a mutual fund portfolio, the risk levels will go down. Same is the case with multi cap equity funds. The risk profile in multi cap funds is comparatively lower than midcap and small cap schemes.

Actually, the risk in multi cap funds is slightly higher than large cap funds. Large cap funds invest only in the stocks of blue chip companies, thus, the risk is moderate in them. Multi Cap schemes invest in large cap alongwith stocks of mid & low cap companies, putting it in on high risk pedestal. But the risk is not as high as midcap & small cap schemes. In the event of market failure, the large cap stocks in the multi cap portfolio will balance the risk. So, in bearish markets, an investor wouldn’t lose as much as he would’ve lost by investing in mid & small cap mutual funds.

Which Investors should Opt to Invest in Multi Cap Mutual Funds?

Investors with a long term investment horizon and who are moderate risk takers, can invest in Multi Cap funds. This fund is beneficial for investors who do not possess enough knowledge and acumen to invest in small cap and mid cap funds, can opt for the multi cap avenue. Investors get a taste of both worlds, stable and aggressive returns, by investing in multi cap mutual funds. However, it is extremely important to understand the risks associated with any mutual fund before investing. You should not only evaluate the fund’s risk, but also assess your risk profile.

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Recommended Multi Cap Funds to Invest In!

Fund NameRiskometer1 Year Return 3 Year Return 5 Year return  
DSP Focus FundModerately High-10.58%4.25%8.07%
SBI Magnum MultiCap FundModerately High-5.64%7.47%11.42%
Motilal Oswal Multicap 35 FundModerately High-10.23%7.60%14.52%
Axis Focused 25 FundModerately High-8.66%11.57%12.08%
Aditya Birla Sun Life Equity FundModerately High-10.59%5.90%9.52%


Note: All the data that has been mentioned in this articleis sourced from Value Research as on Aug 23, 2019. The return data pertains to the Regular Plan.

How to Invest in Multi Cap Funds Online?

If you wish to invest in Multi Cap Funds, you can do so through Wishfin, a financial marketplace, where you can choose the best sector funds for you and rule out the ones that doesn’t seem a great fit by comparing. To invest, all you have to do is follow the below mentioned steps:

  • Log on to www.wishfin.com
  • Go  to ‘Mutual Funds’
  • Click on on ‘Login/Register


If you are a new investor who is keen on investing, you need to follow the below mentioned registration process.

Registration Steps:

  • Mention your mobile number
  • Click on ‘Next’
  • Enter the One-time Password (OTP) received on your mobile number
  • Click on ‘Verify and Continue’
  • Mention full name, email, city
  • Create a password that must have the required number of alphabets, numeric and special characters
  • Click on ‘Sign Up’
  • Mention a few more details before the registration can be made successfully


Login Steps

  • Mention your email or mobile number
  • Click on ‘Get OTP’ to receive the same
  • Enter OTP at the prescribed space
  • Click on ‘Login’
  • Go to ‘Explore Mutual Funds’
  • Go to ‘Equity’ and then on to ‘Multi Cap Funds’
  • Click on ‘Invest’ below any of the sector funds shown above

Disclaimer: Mutual Fund Investments are subject to market risks, read all scheme related documents carefully before investing.