Multi-Cap Funds Vs Large-Cap, Mid-Cap And Small-Cap Funds

Multi-Cap funds invest across categories of equity like large-cap, mid-cap and small-cap and that too in a proportion which the fund manager feels suitable. However, what if you create a portfolio of large-cap, mid-cap and small-cap funds? DSIJ studies and explains what should be your approach, i.e., whether to go for multi-cap funds or create a personalised portfolio of large-cap, mid-cap and small-cap funds.

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Last one-and-half year has not been very kind to mutual fund investors. First, we saw equity investors losing their money due to correction in the equity markets in the year 2018 after the reintroduction of long term capital gain tax. Once the market was coming out of this turmoil, it was hit by the debt market crisis, which led to losses to investors in their debt portfolios. We are still not out of woods; however, there are some pockets of opportunities emerging. One of these is the multi-cap funds, which have outperformed other categories in the last three months ending June 2019. On average, these funds have performed better than any other equity category of mutual funds, except for sectoral funds. This

outperformance has also attracted higher monthly inflows into this category. According to the data published by industry body, Association of Mutual Funds in India, in the last two months, the net inflow in multi-cap funds has been to the tune of 2521 crore, higher than any other equity category such as large-cap, small-cap and mid-cap during the same period. So, is it the right time to invest in multi-cap funds and are they going to outperform other categories? Before that, let us understand what are multi-cap funds.

Multi-cap funds