New investors aiming for long-term capital appreciation should consider multicap funds

Multicap funds: A diversified approach for new investors These funds invest in a diversified range of stocks from small-cap, mid-cap, and large-cap segments, helping mitigate risk and potentially preserve capital against inflation. Multicap funds also save time and effort for busy millennials

Most new investors are now beginning to take responsibility for their future and their families’ well-being. Many may have just started investing or have been investing for a few years. The goal for most new investors is to aim for long-term capital appreciation.

Investors, who are new to investments, can potentially consider multicap funds for their needs. A multicap fund invests at least 25% of its total capital in small-cap , mid-cap and large-cap stocks and at least 75% of the total capital is mandated to be invested in equities.

Let’s discuss some of the ways in which multicap funds can help new investors.

Consider inflation
The primary reason why investing can be an essential activity is due to inflation.

Inflation can potentially erode savings over time. This is because when inflation is present in the economy, goods and services will get costlier over time. This means that a person will be able to purchase fewer goods and services with the same amount of money in the future, compared to the present.

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Investing in equities can be a way for investors to potentially preserve and aim for capital appreciation over time as it has the scope to match inflation.

For new investors
The problem with investing is that it can be confusing and overwhelming for someone who is just starting out. For most of the new investors, it can be potentially beneficial to invest in a diverse group of stocks.

A multicap fund invests in all three types of stocks classified on the basis of the m arket cap. It invests in small-cap, mid-cap, and large-cap stocks. It is also required to invest at least 25% of the corpus in each market segment.

This way, a new investor can gain exposure to a diverse basket of stocks of different sizes and across many sectors in a single fund. Multicap funds thus could be beginner-friendly .

Less time and lower cost
Another roadblock to investing for millennials can be time and money. Millennials are busy and may not have the time to properly learn how to invest.

A multicap fund can be an option for a ‘#SochaSamjhaNivesh’ for new investors as they don’t have to pick equity stocks on their own and can potentially benefit from a multicap fund without spending the time to cherry-pick the equity stocks on their own.

A multicap fund may be a potentially good choice for investors, especially those who have just started investing. It provides exposure to a wide variety of companies of different sizes and from different sectors, helping spread out risk and aiming for long-term capital appreciation.

This is an investor education and awareness initiative by Axis Mutual Fund.

Investors have to complete 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.

Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s).

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.

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. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.

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

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This story originally appeared on: India Times - Author:Faqs of Insurances