Risks associated with Multi Cap Mutual Funds

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....

Types of Multi-Cap Funds

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Factors to Consider Before Investing in a Multi Cap Fund

Multi-cap funds can prove to be terrific wealth creators in the long term since they can take advantage of investing opportunities throughout the market. They can be categorised as :...

When should you invest in a Multi Cap Equity Fund?

1. Fund Manager Performance : A multi-cap fund invests in the stock and equity-related securities of firms that have different market capitalizations. Furthermore, the fund management is always searching for ways to diversify the investment in order to meet the scheme’s objectives. The success of such schemes is therefore greatly dependent on the fund management. Before investing, you should look at the fund manager’s previous performance across multiple schemes. You should also consider how he managed the multi-cap fund during times of market ups and downs....

Risks associated with Multi Cap Mutual Funds

When your investment goal is long-term wealth growth and you have a moderate risk tolerance, you should consider investing in Multi-Cap Mutual Funds. These schemes provide a diverse approach to stock market investing and strive to make best of every investment opportunity. Investors who are willing to take moderate risks and do not have the time to examine a specific fund in the market might consider investing in multi-cap schemes for long-term wealth growth because these funds have the potential to outperform large-cap funds, but offer lower returns when compared to mid- and small-cap funds....

Tax Implications on Multi Cap Mutual Funds

Multi-cap funds are considered to have a moderate risk-return profile. When markets are rising, they can outperform large and mid-cap funds. They also collect good gains from small-cap equities during market surges. When markets are down, however, large-cap funds can offer the cushioning needed to prevent returns from being eroded and severely damaged. They are less volatile than mid-cap funds in the long term, but riskier than large-cap funds. Fund managers can also deploy additional fund resources to a certain capitalisation depending on market movements....