Multicap Funds are equity oriented mutual funds that invest atleast 25% of their funds in the large-cap, mid-cap, and small-cap categories for getting a balanced exposure across market segments.
The caps mentioned above is linked to the Market Capitalisation of the firms who are represented by their stocks.
Large Caps(Market Cap > ₹20k Crores) are normally well established companies like Reliance Industries, L&T, Grasim, etc.
Mid-caps(Market Cap between ₹5k-₹20k Crores) are mid-sized growing companies like IRCTC, ICICI Lombard, HDFC Asset Management Company, etc.
Small Caps(Market Cap < ₹5000 Crores) are fast growing companies like Ion Exchange, CDSL, Apollo Tyres, Radico Khaitan, etc.
Pros of Multicap Funds:
- Diversified exposure across all market segments, reducing risk
- Balanced approach to growth and stability
- Ideal for long-term wealth creation
Cons of Multicap Funds:
- Less flexibility compared to flexicap funds (which can invest inline with market conditions)
- Performance may be constrained during specific market cycles if one segment underperforms
Why should investors consider Multicap Funds?
- Multicap funds provide a steady mix of growth and stability. For investors seeking diversified equity exposure without the need to monitor individual caps, they are a solid choice
Hope you find this helpful
As an investor in the financial markets, consider your risk appetite, financial goals, and the current market scenario.
Diversification with purpose is always key.
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Happy Investing and God Bless!
About the Post Author:
The Author is an AMFI registered Mutual Fund Distributor (ARN-262589). Reach out to him via email: edteficonsult@gmail.com
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