Multi cap funds: A comprehensive solution for every investor They help investors navigate market volatility by balancing exposure to different market segments. India's growing economy and proactive sector investments further enhance the appeal of these funds
Investing in equities can often overwhelm new investors and even seasoned ones, given the number of options available. A fund category that may help simplify decision-making for worried, confused, or over-ambitious equity investors can be multi cap funds. In today's world, where making smart investment choices is crucial, multi cap funds offer a simple yet powerful way to potentially grow your money.#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} Understanding Multi Cap Funds
Multi cap funds, regulated by the Securities and Exchange Board of India (SEBI), are defined by their investment mandate of allocating at least 75%1 of their assets in equity and equity-related instruments, with minimum 25% in each of the large, mid, and small caps.
These funds are like baskets that hold a mix of different kinds of stocks from different market capitalisations. Imagine you're at a fruit market, and instead of just buying apples (large-cap stocks) or bananas (mid-cap stocks) or grapes (small-cap stocks), you decide to get a basket with a mix of all three. That's what a multi cap fund does: it allows you to invest in all three market caps with a single fund.
Suitable for every investor
The beauty of multi cap funds lies in their inclusivity — they're for everyone dabbling in the world of equities! For the worried investor, multi cap funds can offer a comprehensive solution for those concerned about missing out on market opportunities, as they invest across all market capitalisation segments. For a confused investor, multi cap funds can help alleviate investor uncertainty by strategically allocating investments across various market caps, providing a well-diversified portfolio. And if you're ready to take on more risk for the scope of faster growth, the smaller companies in the mix can offer potential growth opportunities. By diversifying investments across different market segments, these funds cater to varying risk appetites.
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Adapting to market dynamics
One of the key advantages of multi cap funds is their exposure to all market caps. The composition of these funds enables investors to navigate through dynamic market conditions with resilience. During certain market cycles, mid and small-cap stocks may outperform. Conversely, during downturns, the allocation towards large-cap stocks may provide potential stability to the portfolio. This ensures that investors can weather market volatility while potentially optimising returns over the long term.
ET SpotlightSource: MFIE (Data as of Dec 31, 2023)Participating in India's growth storyIndia's economy is undergoing rapid progress, supported by robust GDP growth and a thriving business landscape. With the target to achieve the milestone of $5 trillion2 equity market capitalisation, India presents abundant opportunities for companies across the entire market spectrum to thrive. Strategic investments in key sectors like infrastructure, manufacturing, and technology highlight a proactive approach in driving sustainable progress.
This favourable market environment not only enhances the appeal of multi cap funds for investors but also reflects India's commitment to fostering long-term growth.
Multi cap funds provide a convenient entry point into a market where small-cap companies may mature into mid-cap contenders and eventually grow to large-caps, allowing investors to capitalize on this upward trajectory effectively.
At the core, multi cap funds provide diversification
Diversification across market segments
Multi cap funds offer diversification not only across market capitalisations, but also across sectors. Large-cap stocks belong to well-established companies with large market capitalisations, mid-cap stocks represent companies that are in a phase of growth and expansion, and small-cap stocks typically include emerging companies with high growth potential.
By spreading investments across companies of different sizes, multi cap funds reduce the risk associated with any single segment of the market. This diversification also ensures that investors are not overly exposed to the performance of a particular segment, thereby enhancing portfolio stability. India's economy is diverse, comprising various sectors such as IT, healthcare, finance, consumer goods, and manufacturing, among others. Each sector responds differently to economic cycles and market conditions.
Multi cap funds allocate investments across different sectors, thereby reducing sector-specific risks. This sectoral diversification ensures that investors' portfolios are not overly reliant on the performance of a single industry, enhancing resilience.
Multi cap funds aim to deliver relatively better risk-adjusted returns
Multi cap funds aim to strike a balance between risk and reward. By investing across large, mid, and small-cap companies, they offer diversification that can help mitigate risk compared to a fund focused on a single market segment. This diversification also allows them to potentially capture growth opportunities across the entire market capitalisation spectrum. As a result, multi cap funds have the potential to deliver relatively better risk-adjusted returns, meaning they offer a good balance between potential growth and risk exposure.
In essence, multi cap funds are like all-in-one packages for investors. They give you a mix of stocks that may help your money potentially grow over time, while also cushioning it during rough patches in the market. So, if you're looking for a hassle-free way for your Socha Samjha Nivesh and want access all three market caps with a single fund, multi cap funds could be a good fit for your portfolio!
NOTE - This is an investor education and awareness initiative by Axis Mutual Fund.
Investors have to complete a one-time KYC process.
Visit www.axismf.com or contact us on [email protected] for more information. Investors should deal only with Registered MFs, details of which are available on www.sebi.gov.in – Intermediaries/ Market Infrastructure Institutions section.
For any grievance redressal, investors can call us on 1800 221 322 or write us at [email protected] or register complaint on SEBI Scores portal at http://scores.gov.in.
Market caps are defined as per SEBI regulations as below: a. Large Cap: 1st -100th company in terms of full market capitalization. b. Mid Cap: 101st -250th company in terms of full market capitalization. c. Small Cap: 251st company onwards in terms of full market capitalization.
Sector(s) mentioned above are for general purposes and should not be construed as recommendation.
Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh).
Trustee: Axis Mutual Fund Trustee Ltd.
Investment Manager: Axis Asset Management Co. Ltd. (the AMC).
Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme.
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
References -
Investment mandate of allocating at least 75%5 Trilion Dollar EconomySource: Axis MF Research, AMFI, MFIE (Data as on August 31, 2024)
Disclaimer: The above content is non-editorial, and TIL hereby disclaims any and all warranties, expressed or implied, relating to the same. TIL does not guarantee, vouch for or necessarily endorse any of the above content, nor is it responsible for them in any manner whatsoever. The article does not constitute investment advice. Please take all steps necessary to ascertain that any information and content provided is correct, updated and verified.
#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;} (This article is generated and published by ET Spotlight team. You can get in touch with them on [email protected])
This story originally appeared on: India Times - Author:Faqs of Insurances
