What Are Multi Cap Funds?
An open ended equity scheme investing across large cap, mid cap & small cap stocks
Multi cap funds follows a regulatory framework of minimum allocation requirement of 25% across these market segments, which ensures a diversified exposure to companies of various sizes.
- 25% in Large cap companies: Generally, more stable and well-established.
- 25% in Mid cap companies: Businesses that are expanding and have potential for growth.
- 25% in Small cap companies: Younger or niche businesses that may offer higher growth potential.
- Balance allocation of up to 25% of total assets based on view of the fund manager.
Benefits of Multi Cap Funds
- Provide exposure to large-cap, mid-cap and small-cap companies in one diversified equity portfolio
- Help balance stability (large caps) with growth potential (mid & small caps)
- Reduce concentration risk by spreading investments across different segments of the market
- Allow participation across various market cycles, as different caps perform differently at different times
Why Investors Consider Multi Cap Funds
To have diversification across company sizes that can help manage market fluctuations
To participate in a broad equity universe without choosing individual segments
To gain a mix of stability and potential growth within one investment approach
To benefit from professional management that allocates across caps as per fund objective
Who are Multi Cap Funds Suitable For?
- Investors with a long-term horizon (typically 5 years or more)
- Individuals seeking simple, built-in diversification equity exposure in one investment strategy
- Prefer a balanced approach rather than focusing only on one market segment
- Are comfortable with equity-linked volatility
