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Who Should Invest in Multi Cap Mutual Funds?

Mutual Funds101 views

Highlights

  • Diversity is a key feature of multi cap funds. This is what balances the risk in the portfolio.
  • Some Multi Cap funds have given a 5-year return of upto 15%.

The portfolio of a multi cap scheme has stocks of large cap, mid cap and small companies. As per the new SEBI regulations, multi cap funds must invest 65% of their corpus in equity and equity related instruments. As its portfolio comprises of stocks of all sorts of companies, it offers diversity to investors.

It gets really hard for new investors to have a taste of mid cap and small cap funds. This is because they are inexperienced investors and have no idea how to predict the movement of these stocks in the near future. Thus, a diversity in the mutual fund scheme saves them from the risk of losing all their money and also give them a taste of investing in mid & small cap stocks. Diversity ensures decent returns with moderate risk. For instance, even if the mid & small cap stocks in a multi cap fund does not perform well, the large cap stocks has got your back.

Multi cap equity schemes are suitable for cautious and moderate risk taking investors with a long investment horizon in mind. A long horizon is emphasized because a major proportion of the multi cap portfolio are equity investments, and equity schemes provide the best returns only in the long haul (atleast seven to ten years). These funds are recommended for investors who want to build a large corpus for retirement or want to accumulate funds for higher education.

What are the Advantages of Multi Cap Mutual Funds?

Low Risk: Risk is moderate in the case of multi cap equity schemes because of its diverse nature. Compared to mid and small cap stocks, the risk is way lower in multi cap.

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Good Returns: Return is the reward for the risk you take. As the risk profile of a multi cap scheme is higher than that of a large cap fund, the returns in multi cap are also higher. What fetches good returns is its investment in mid cap and small cap stocks.

Flexibility: Multi cap funds give fund managers the flexibility to tamper with the proportion of large, mid and small cap stocks every now and then, according to their view of the market.

Recommended Multi Cap Funds to Invest In!

Fund Name1 Year Return 3 Year Return 5 Year return  
DSP Focus Fund-6.45%5.31%9.59%
SBI Magnum MultiCap Fund-2.66%8.39%12.83%
Motilal Oswal Multicap 35 Fund-8.48%8.31%15.26%
Axis Focused 25 Fund-5.26%12.36%13.28%
Aditya Birla Sun Life Equity Fund-6.49%7.26%10.68%


Note: All the data that has been mentioned in this articleis sourced from Value Research as on Aug 16, 2019. Also, this data is in regards to 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
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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.