Multi-Cap Mutual funds are part of mutual funds where Investors pool in their investment to invest in the Small-cap, Mid-cap, and Large-Cap Companies in a specified portion. Multi-Cap Mutual funds do not follow the ratio of Small-cap, Mid-cap, and Large-cap mutual funds which are fixed as per SEBI guidelines.
Every scheme invests in different proportions making the Multi-Cap Mutual Fund category a good option to have well-managed risk and good returns. A multi-cap mutual fund is considered to be a good option for wealth creation, A multi-cap mutual fund manager can leverage investment opportunities across the scaleof the market. Every investor can find a multi-cap mutual funds scheme that accompanies their financial goals.
Types of Multi-Cap Mutual funds:
- Multi-Cap mutual funds focused on Large-Cap companies:
Multi-Cap mutual funds focused on the Large-Cap company, this scheme focus on investing in the large-cap company stocks then search for opportunities in the small-cap and Mid-cap company stocks.
- Multi-Cap mutual funds focused on Mid-Cap companies:
Multi-Cap mutual funds focused on the Mid-Cap company, this scheme focus on investing in the Mid-cap company stocks then search for opportunities in the Small-cap and Large-cap company stocks.
- Multi-Cap mutual funds focused on Small-Cap companies:
Multi-Cap mutual funds focused on the Small-Cap company, this scheme focus on investing in the Small-cap company stocks then search for opportunities in the Mid-cap and Large-cap company stocks.
- Multi-Cap mutual funds with Zero focus on market capitalization:
Multi-Cap mutual funds with Zero focus on market capitalization, this scheme look for investment opportunities across market capitalizations with a clear focus on finding best stocks that can outperform in the market.
Features of Multi-Cap Mutual funds.
Good Returns and Risk:
Multi-Cap mutual funds are investing money in multiple companies irrespective of market capitalization even there are schemes which focused on Large-cap, Mid-Cap, and Small-cap companies but the primary objective of Multi-cap mutual funds is to select the stock of the company which can outperform well.
Multi-Cap mutual funds are investing funds in all types of companies based on the schemes so the risk will be controlled and set as per your requirement. Multi-Cap Mutual funds are risky compared to Large-cap mutual funds.
Expense Ratio:
Multi-cap mutual funds charge you the fees for managing the Investment by the company that in general it is called the Expense ratio. SEBI has mandated the maximum limit of expense ratio is to be 2.50%. The Expense ratio to be considered in priority during the selection of scheme any scheme with a lower expense ratio will help to gain maximum profit.
Tax Implications:
Multi-Cap mutual funds are subject to capital gains and dividend distribution tax both are explained below in brief below slab may change as per policy by the gov’t in the future.
- Capital Gains Tax
Withdrawing the units of a Multi-Cap Mutual Funds will add to taxable capital gains in the Income of an Individual. The rate at which you will be taxed depends on the period for which you stayed invested in the scheme – the holding period. The tax rates are as follows:
Long Term Capital Gain (LTCG) – A holding period of more than one year. There is no tax on LTCG of up to Rs. 1 lakh. Above this amount, LTCG is taxed at the rate of 10% without the benefit of indexation.
Short Term Capital Gain (STCG) – A holding period of up to one year. STCG is taxed at 15%.
- Dividend Distribution Tax (DDT)
As mandated by SEBI, all fund houses deduct a DDT of 10% before paying out dividends to unitholders.
Advantages of Multi-Cap Mutual Funds:
- Multi-Cap mutual funds provide good returns compared to large-cap mutual funds. This scheme is the combination of Small-cap, Mid-cap, Large-cap mutual funds.
- Multi-cap mutual funds invest money in Small-cap, Mid-cap, and Large-Cap companies that will outperform in the market.
- Multi-cap mutual funds are investing in the companies which are having good potential to grow without much restriction on market cap.
- Multi-cap mutual funds are managed by professional fund managers and research analysts has the freedom to switch between the different market caps and sectors based on the tune of the market
Disadvantages of Multi-Cap Mutual Funds:
- Multi-cap mutual funds do not provide stable returns in the market as compared to Large-cap mutual funds.
- Multi-Cap mutual funds are risky compared to Large-cap mutual funds.
- Multi-Cap mutual funds provide less returns compared to Small-cap and Mid-cap mutual funds.
- These schemes may have volatility as the fund managers are free to shift the investment on different companies based on the performance of stocks if the fund manager is focused on Small-cap or Mid-cap companies more to gain the returns in the short term these might increase the risk on investment.
Top 5 Multi-Cap Mutual funds:
1. Kotak Standard Multi-Cap Fund:
Fund size (Cr) : Rs. 29714 Cr
1 Yr Return : -1.48 % PA
3 Yrs Returns : 2.18 % PA
5 Yrs Returns : 8.46 % PA
7 Yrs Returns : 13.65 % PA
NAV as on 03 Oct 2020 : Rs. 35.17
Expense Ratio : 1.66
2. PGIM India Diversified mutual Fund:
Fund size (Cr) : Rs. 225.6 Cr
1 Yr Return : 14.79% PA
3 Yrs Returns : 18.48% PA
5 Yrs Returns : 51.51% PA
7 Yrs Returns : 51.30% PA
NAV as on 25-Sep-2020 : Rs. 15.13
Expense Ratio : 2.44
3. UTI Multi-Cap Fund:
Fund size (Cr) : Rs. 10,982.95
1 Yr Return : 6.15% PA
3 Yrs Returns : 24.04% PA
5 Yrs Returns : 51.75% PA
7 Yrs Returns : 167.14% PA
NAV as on 25-Sep-2020 : Rs. 151.57
Expense Ratio : 1.96
4. Union Multi-Cap Mutual Fund:
Fund size (Cr) : Rs. 370.74 Cr
1 Yr Return : 4.04% PA
3 Yrs Returns : 13.94% PA
5 Yrs Returns : 35.13% PA
7 Yrs Returns : 103.5% PA
NAV as on 25-Sep-2020 : Rs. 20.35
Expense Ratio : 2.50
5. Parag Parikh Multi-Cap mutual fund:
Fund size (Cr) : Rs. 4,508
1 Yr Return : 19.8% PA
3 Yrs Returns : 12.6% PA
5 Yrs Returns : 14.3% PA
7 Yrs Returns : 17.0% PA
NAV as on 25-Sep-2020 : Rs. 31.72
Expense Ratio : 1.05
Disclaimer: All the above informationis for educational purposes only, and the mutual fund’s companies shown are not considered as recommendations as the above data might vary from actuals in the period. kindly read the scheme and policy-related documents carefully before investing in any mutual funds and visit the official website for more information.
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