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Equity mutual funds are one of the most popular investment tools in the market today. If you are new to them, you will find your choices lie between deciding between small-cap, mid-cap, large-cap, and multi-cap funds. While large-cap funds offer stability, small-cap funds are popular for their attractive returns.<\/p>\n\n\n\n
But, when it comes to diversification and flexibility, nothing beats multi-cap funds. So, what is a multi-cap fund? Learn about this asset class and its benefits in this article.<\/p>\n\n\n\n
Multi-cap funds are essentially equity funds with holdings in stocks of companies with varying market capitalisation. This means that multi-cap funds consist of a medley of large-cap, mid-cap, and small-cap funds. The proportions depend on the investment approach and objective of the fund.<\/p>\n\n\n\n
Large-cap, medium-cap and small-cap funds are bound by the size of companies they can invest in. They have clear mandates that will not allow them to invest in companies outside of their category. For instance, a large-cap fund<\/a> will not invest in small-cap stocks, even if doing so will result in high returns. Because multi-cap funds have no such restrictions and are able to take advantage of market opportunities, they prove to be better wealth creators.<\/p>\n\n\n\n Additional Read: <\/strong>With the new SEBI rules, are Multi-cap funds worth the risk?<\/a><\/p>\n\n\n\n 1. Diversification<\/strong><\/p>\n\n\n\n Multi-cap funds invest across large, mid, and small-cap stocks, providing broad market exposure. With a diversified approach, they help manage risk and maximise return potential.<\/p>\n\n\n\n 2. Investment horizon<\/strong><\/p>\n\n\n\n Multi-cap funds typically invest in funds for a long-term investment horizon. This makes them an excellent option for investors seeking long-term wealth generation with moderate risk.<\/p>\n\n\n\n 3. Active Management<\/strong><\/p>\n\n\n\n Multi-cap funds invest in equity and related instruments of companies with different market capitalisations. Here, fund managers play a crucial role in actively selecting stocks and aiming to capitalise on emerging trends and market movements.<\/p>\n\n\n\n 4. Risk Management<\/strong><\/p>\n\n\n\n With investments in various small-cap<\/a>, mid-cap, and large-cap companies, they carry a relatively higher risk than majorly investing in big companies.<\/p>\n\n\n\n Multi-cap funds can be broadly classified into these types-<\/p>\n\n\n\n 1. Concentrated on large-cap<\/strong> stocks<\/strong><\/p>\n\n\n\n These schemes primarily focus on investing in large-cap stocks and small and mid-cap stocks as a secondary option.<\/p>\n\n\n\n 2. Small\/mid-cap concentrated funds<\/strong><\/p>\n\n\n\n <\/strong>These funds actively invest in small-cap and mid-cap stocks and only invest in large-cap stocks as a safeguard to manage risk.<\/p>\n\n\n\n 3. No specific concentration<\/strong><\/p>\n\n\n\n These funds only focus on investing in funds that will outperform, irrespective of the market capitalisation.<\/p>\n\n\n\n Within multi-cap funds, there are no regulations governing the size and nature of companies the funds can invest in. This is why they invest in a diversified portfolio of stocks across large, mid, and small-cap companies, and the proportion of stocks can vary depending on the decisions of the fund manager.<\/p>\n\n\n\n Fund managers analyse market trends and select stocks across different market caps. They adjust the portfolio to respond to changing market conditions and opportunities. For instance, when the economy is booming, fund managers can increase exposure in mid-cap and small-cap funds<\/a> to capitalise on the market growth.<\/p>\n\n\n\n You can invest in multi-cap mutual funds through Tata Capital Moneyfy. Just follow these simple steps-<\/p>\n\n\n\n 1. Visit the Google Play Store or Apple App Store to download the Tata Capital Moneyfy app.<\/p>\n\n\n\n 2. Sign up by filling in your necessary details and completing the KYC.<\/p>\n\n\n\n 3. Research different multi-cap mutual funds and compare their performance, expense ratios, and fund managers.<\/p>\n\n\n\n 4. Choose a suitable fund and invest immediately.<\/p>\n\n\n\n What are the advantages this mutual fund<\/a> category offers?<\/p>\n\n\n\n If there is a golden rule of investing, it is diversification. There is no escaping the fact that the stock market fluctuates. Sometimes, certain small-cap stocks soar up, and at other times large-cap stocks go down. If you have invested in a fund that only invests in a particular category, market fluctuations can affect your overall returns. Multi-cap funds don\u2019t restrict your investments to companies with a certain market capitalisation. Thus, by virtue of a diversified portfolio, you get more of a cushion against market risk with multi-cap funds.<\/p>\n\n\n\n Another advantage of a multi-cap fund is the decent returns (comparable to mid-cap) it offers. If you have a moderate risk appetite and want to invest in the stock market without spending time researching stocks and funds, pick multi-cap funds. These are excellent tools for wealth creation in the long run. You can safely assume that they will give you better returns than large-cap funds, but less than small-cap funds<\/a>. Thus, by investing in a multi-cap scheme, your portfolio can have exposure to companies of different sizes and can enjoy diversification.<\/p>\n\n\n\n Additional Read: <\/strong>What Is The Power of Compounding & How Can You Use It?<\/a><\/p>\n\n\n\n Bottom line<\/p>\n\n\n\n In this article, we\u2019ve answered the question – what are multi-cap funds? Multi-cap funds offer a host of advantages – good returns, diversity, flexibility, and risk mitigation. Choose these funds if you have a moderate risk appetite but want exposure to the stock market.<\/p>\n\n\n\n If you are looking for a platform to begin your investment journey with, Tata Moneyfy’s mutual fund app<\/a> is the right partner for you. With an easy application process, user-friendly interface and strong after-sales service, you can achieve all your financial goals under one roof.<\/p>\n\n\n\n Download our app from Google Play or the App Store today and start exploring different funds and schemes to meet your goals.<\/p>\n\n\n\nFeatures of a multi-cap fund<\/strong><\/h2>\n\n\n\n
Types of Multi-Cap Mutual Funds<\/strong><\/h2>\n\n\n\n
How does a multi-cap mutual fund work?<\/strong><\/h2>\n\n\n\n
How to invest in a multi cap mutual fund?<\/strong><\/h2>\n\n\n\n
Advantages of multi-cap funds<\/strong><\/h2>\n\n\n\n