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Equity - Multi-cap 

MULTICAP Funds are mutual fund schemes that invest in stocks across market capitalization.i.e. Small Cap, Mid Cap and Large Cap.

What is Multi Cap Mutual Fund?

A mutual fund investment in shares of companies across multiple market capitalization is called a multicap fund. The portfolio of this fund comprises of large cap, mid cap and small cap companies in a specific proportion. Based on market movements, the fund manager may keep switching the fund holdings across large, mid and small cap stocks.
They are less risky as compared to mid-cap and small cap funds. During a bull run they can be expected to deliver better returns than large cap funds.

How to compare top performing Multi Cap mutual funds?

Various factors are considered by investors to compare these funds. Some of these include:

Return offered

An investor can compare multi cap funds according to the growth offered across different periods, i.e. across a year, three years and five years or more.

Expense ratio

Expense ratio is the cost charged by the fund to manage an investor’s portfolio. For example, if an investor invests Rs. 20,000 in a fund whose expense ratio is 2%, then the investor needs to pay the fund Rs 400. In simpler words, if the fund offers a return of 20% in a year, then the actual return for an investor is 18%. This is because the cost of 2% must be parted with the fund. Therefore, investors can compare funds according to their expense ratio.

Fund manager

Investors can also evaluate the performance of the fund manager. If a fund manager has been handling a fund for a long time and delivering consistent returns, then an investor could consider investing in such a fund.

Benefits of investing in Equity Multicap Funds

  • Since multicap funds invest in stocks across different market capitalization, the risks of a downturn are suitably hedged
  • They offer steady growth
  • Without being too volatile, they can offer better returns than a large cap fund
  • Investment made in a multicap fund is suitably diversified