Investing in mutual funds there can be a question which fund will be best for you or where should you invest for a good return. When SEBI re-categorized the mutual funds, Mutual Funds advisors started to recommend the multi-cap fund category to investors. Investors asked the first question that which is the best fund to invest but the first question should be which is a category is most appropriate to choose the fund from- what should be it Large cap, Mid Cap, Small Cap, Multi-Cap or Sectoral Fund category. Every category has its own advantages. Large Cap funds will give stability to your portfolio while Mid Cap and Small Cap funds will give you high returns.
Multi-Cap funds are flexible to invest anywhere. Multi-Cap Funds are diversified mutual funds which can invest in companies across market capitalization. As per regulatory mandate, Multi-Cap funds need to invest in equity or equity-related instrument at least 65%. Multi-Cap funds maintain a diversified portfolio with Small Cap, Mid Cap, and Multi-Cap.
Performance of Multi-Cap
Equity funds vs. S&P BSE Sensex Index benchmark comparison.
| Equity Schemes | 1 Year | 3 Years | 5 Years | 7 Years |
| Large-Cap | 28.87% | 7.84% | 11.85% | 8.30% |
| Mid and Small-Cap | 47.16% | 20.33% | 20.00% | 13.52% |
| Multi-Cap/ Diversified | 28.87% | 7.84% | 11.85% | 8.30% |
5 things to Consider before investing in Multi-Cap Funds
- Multi-Cap Funds invests in the stocks of companies which offer high growth, risk, and value. The pricing of stock is based on investing style which can value on growth investing, The fund manager also consider the P/E ratio, EPS and Enterprise value to ensure that the portfolio is composed of only quality stocks
- Multi cap funds also face market risk like other equity funds. The fund manager has the skills to modify the asset allocation in order to take advantage in every market condition.
- An expense ratio is charged by multi-cap funds for managing your money. Till now the SEBI has set it a maximum of 2.50%. As these funds have managed to gain every time of market this funds might have a higher turnover ratio.
- Multi-Cap funds are for those who have investment goals for medium to long term investment goal. ELSS (Equity Linked Savings Scheme)comes up with 3-year lock-in period which is also a diversified fund. This fund fluctuates a lot for short run which averages out over the long run.
- Multi-cap equity funds are best for those who have long term goals like- investing for your daughter’s education, investing for your retirement or your dream vacation. These funds have delivered high returns compared to the benchmark. Maybe this fund has high risk but the return is worth of risk.
Top 5 Multi-Cap Funds of 2019
| Fund Name | Fund Manager Name | 1 Year | 3Years | 5Years | 10Years | AUM Value (cr.) |
| Mirae Asset India Equity Fund | Neelesh Surana | -2.08 | 15.5 | 18.84 | 22.01 | 10057.67 |
| Motilal Oswal Multicap 35 Fund | Gautam Sinha Roy, Swapnil Mayekar, Avirup Mukherjee | -10.38 | 12.97 | – | – | 13,180 |
| SBI Magnum Multi Cap Fund | Anup Upadhyay | -7.32 | 11.77 | 18.9 | 16.88 | 6402.1 |
| Kotak Standard Multicap Fund | Harsha Upadhyay | -2.36 | 14.37 | 18.96 | – | 21,719 |
| Aditya Birla Sun Life Equity Fund | Anil Shah | -6.07 | 14.81 | 19 | 18.5 | 10,148 |
