What are Multi Cap Funds?
Multi-cap funds are equity mutual funds that do not focus on a specific company’s capitalisation but are exposed to all sectors and companies with different capitalisations. This diversifies them and gives a balanced exposure to company stocks of all sizes. It also minimises the need for investors to invest across multiple funds with different capitalisations by allocating the corpus of a single fund between big, medium, and small-capitalisation equities.
Mutual funds must be specialised in their investing technique in order to comply with rules. A large-cap fund can only invest in the equities of the top 100 publicly traded companies in terms of market capitalisation. Similarly, small-cap funds can invest in firms listed below 250, and so on.
However, multi-cap is the only category that has a regulatory structure defining the size and industry of firms in which it can invest. As a result, these funds invest in equities with large, mid, and small capitalisations. The percentage of these stocks could possibly differ. It is determined by the fund management. They analyse market circumstances and alter the percentage of large-cap, mid-cap, and small-cap stocks in a multi-cap mutual fund’s portfolio appropriately.
Table of Content
- What are Multi Cap Funds?
- Types of Multi-Cap Funds
- Factors to Consider Before Investing in a Multi Cap Fund
- When Should You Invest in a Multi Cap Equity Fund?
- Risks associated with Multi Cap Mutual Funds
- Tax Implications on Multi Cap Mutual Funds