What are multi cap funds?
- As the name suggests Multi-cap means asset allocation in multiple market capitalization such as large cap, mid cap and small cap.
- Multi cap funds are diversified mutual funds.
- Fund manager decides whether to put in large cap or in mid cap as per market scenario.
- If fund manager feels mid cap stocks will out perform then he would maximize asset allocation in mid caps.
- If I want best returns then as an investor I can’t conclude every time where to invest in market.
- So simply invest in good muticap fund, that’s it.
- Fund manager would grab the opportuntity in market on behalf of you if you invest in mulicap funds.
- Returns are comparatively attractive than large cap funds as fund manager has the flexibility to invest in small and mid cap funds too.
- Over the longer period multi cap funds deliver returns near mid cap funds. Conservative investors who don’t want to take much risk in mid cap funds but seek returns somewhat near mid-cap funds then multi-cap funds are best suitable option for them.
- Less risky than mid cap and small cap funds.
- Multi cap funds are more volatile than large cap funds.
- Its up to fund manager when to invest in large cap and when to allocate funds in small and mid cap. Some times his decision could prove not that right so return can be not that much attractive.