Multi Cap funds invest in stocks across market caps i.e. large cap, mid-cap and small-cap stocks. The Multi Cap category aims to benefit from higher growth potential offered by mid and small caps, while aiming to reduce volatility through its exposure to large cap stocks.<\/p>\n\n\n\n
However, a year ago the SEBI has defined new guidelines for multi cap funds with minimum restriction of 25% allocation each in large cap, midcap and small-cap segment. The SEBI gave an option to AMCs either adhere to this or change the name of the funds to “Flexicap”. Flexicap funds were erstwhile Multi Cap funds; they have the freedom to invest across market caps in any proportion without any cap on allocation.<\/p>\n\n\n\n
As per SEBI’s new definition, Multi Cap mutual funds would invest minimum of 25% each in large-cap, mid-cap and small-cap stocks. Beyond this, they can invest based on the investment objective of the fund. Investors, who want to get the benefit from a systematic cap allocation rather than having to time and shift allocations across market cycles, may consider investing in Multi Cap funds.<\/p>\n\n\n\n
Investors looking for higher long-term growth prospects than pure Large Cap, Mid or Small-cap funds. The Multi Cap fund maintains sizeable allocation to all market caps across market cycles, restricting any fund manager bias and offers access to broad range of growth opportunities.<\/p>\n\n\n\n
Joining the bandwagon with ABSL MF<\/a> and Kotak Mahindra MF<\/a>, IDFC Mutual Fund<\/a> has launched IDFC Multi Cap Fund.<\/strong> It is an open-ended equity scheme investing across large cap, mid cap, and small cap stocks.<\/p>\n\n\n\n On the launch of this fund, Mr Vishal Kapoor, CEO of IDFC Mutual Fund said, “At different points of time, different market caps tend to do well, like between 2018 and 2019 large-caps did well, and now we are seeing mid and small-caps doing well in the broader market rally. So, it is not easy to increase or reduce allocations perfectly to coincide with changes in market dynamics. Through a multi-cap fund, investors get a truly diversified equity fund, with adequate exposure across different market caps.”<\/em><\/p>\n\n\n\n Table 1: Details of IDFC Multi Cap Fund<\/em><\/strong><\/p>\n\n\n\n