Multi Cap Fund: Overview, Types & Advantages, And More

Investment decisions can be challenging, especially when it comes to risk tolerance. Multi Cap Mutual Funds invest in big, small, and mid-sized companies. This makes them a great option for those who want to diversify their portfolio and manage risk. Let’s explore Multi Cap Funds and learn more about them!

Overview of Multi-Cap Funds

Multi-Cap Funds invest in a portfolio of equity and equity-related stocks of companies with varying market capitalizations. Multi Cap Funds invest in big, small, and mid-sized companies, making them a great option for those who want to diversify their portfolio and manage risk.

Each option invests in varying quantities, making the Multi-Cap Fund category a suitable alternative to match your risk tolerance. This flexibility allows fund managers to leverage investment opportunities across the spectrum of the market, making it a better option for wealth creation.

Multi Cap Mutual Funds are suited for those with an extended investment horizon. If your financial goal involves long-term wealth creation and you possess a moderate risk tolerance, considering investment in these funds could align well with your objectives.

How Does it Work?

Multi-cap funds offer a unique flexibility in the investment landscape. Unlike other mutual fund categories bound by strict rules, Multi Cap Fund enjoy the freedom to invest across large, mid, and small-cap stocks. The fund manager navigates this diverse terrain based on market dynamics.

During economic upswings, the focus may shift towards mid and small-cap stocks for their growth potential. Conversely, in economic downturns, a tilt towards large-cap stocks provides stability. This adaptability makes Multi Cap Funds resilient in varying market conditions. Investors benefit from a strategic blend, potentially maximizing returns while minimizing risks.

Types of Multi-Cap Funds

Multi-cap funds may offer reasonable returns for investors who lack the motivation to analyze and invest in particular funds. They are most suitable for investors with a moderate risk appetite.

There are mainly three types of Multi Cap Funds:

1. Concentrated on Large Cap Stocks: These funds focus on investing in large-cap segments and secondarily explore small and mid-cap shares.

2. Small Cap/Mid Cap Funds Concentrated Funds: These funds concentrate on investing in small and mid-cap segments and secondarily explore large-cap shares.

3. Multi-cap funds with no specific concentrations: These funds invest in companies of all sizes and across sectors. They have the authority to determine how funds are distributed among large, medium, and small businesses.

Pros and Cons of Multi-Cap Funds

Multi-cap funds involve weighing the benefits of diversification and broad market exposure against potential drawbacks like higher expenses and the intricacies that may challenge novice investors. The following is the breakdown of the pros and cons of Multi-cap funds.

Pros	Cons
Offers a diversified portfolio by investing across companies of various sizes and sectors. This strategy helps control risks associated with different sectors’ varying performance.	Can be complex for beginners to understand due to the diverse nature of investments in stocks with different market capitalisations and sectors.
Provides exposure to all key sectors driving the Indian economy, ensuring investors don’t miss out on any opportunities available in the market.	Tends to have higher expense ratios than other mutual funds, impacting overall returns.
Allows flexibility in adjusting the portfolio mix between large, mid, and small caps based on prevailing market conditions.	Subject to market risks and volatility, influenced by economic, political, and global events beyond the fund manager’s control.

Who can Invest in Multi-Cap Funds?

Multi-cap funds cater to diverse needs, making them accessible for beginners, indecisive investors, those with long-term goals, and those craving growth with controlled risk.

• First Time Investors: Ideal for newcomers due to diversified portfolios, managing risk for those unaware of size-specific investment risks.

• Long-Term Horizon Investors: Suited for individuals with extended financial goals, ensuring the benefits of compounding and a buffer against market volatility.

• Risk-Averse Growth Seekers: Offers exposure to mid/small caps without excessive risk, catering to investors seeking growth opportunities with comfort.

3 Easy Steps to Invest in Multi-Cap Funds

Starting your investment journey in Multi-Cap Funds is as easy as 1-2-3 by using the user-friendly Axis Mutual Fund Investment App. The following is your streamlined guide:

Step 1: Download the Axis Mutual Fund Invest App

Go to the Apple App Store or Play Store, and download the Axis mutual fund investment app to unlock the door to hassle-free investing.

Step 2: Sign Up and Complete KYC

After downloading, sign up on the app and swiftly complete your KYC, ensuring a seamless investment experience.

Step 3: Deposit and Invest

Deposit funds into your account and explore the app to find a suitable multi-cap fund. Once chosen, make your investment swiftly.

In these three easy steps, you are all set up to enter the investment world!

Multi-Cap Fund Taxation Rules

Understanding these tax nuances empowers investors to make informed decisions, ensuring they grasp the financial implications of their Multi-Cap Fund ventures. The following is the concise breakdown:

Capital Gains Tax:

• Short-Term Capital Gains (STCG): Taxed at 15% for holdings less than 1 year.
• Long-Term Capital Gains (LTCG): No tax on gains up to 1 lakh held for over 1 year; beyond that, a 10% tax applies without indexation.

Dividend Distribution Tax (DDT):

Fund houses deduct a 10% tax (DDT) from dividends before disbursing to unitholders.

Conclusion

Multi Cap Funds present a dynamic investment avenue, catering to diverse portfolios. Their adaptability across market caps offers a balanced approach, aligning with varying economic scenarios. With the potential for considerable returns, these funds suit investors seeking a flexible and diversified strategy for long-term wealth accumulation.

Note: Views and opinions contained herein are for information purposes only and should not be construed as investment advice/ recommendation to any party or solicitation to buy, sale or hold any security or to adopt any investment strategy. It does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. The recipient should exercise due caution and/ or seek professional advice before making any decision or entering into any financial obligation based on information, statement or opinion which is expressed herein.

Statutory Disclaimer: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC). Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.

Past performance may or may not be sustained in future.

Mutual Fund Investments are subject to market risks, read all scheme-related documents carefully.

Market caps are defined as per SEBI regulations as below: a. Large Cap: 1st -100th company in terms of full market capitalization. b. Mid Cap: 101st -250th company in terms of full market capitalization. c. Small Cap: 251st company onwards in terms of full market capitalization.