Key Trends & Benefits of Multi-cap Growth Funds

Narnolia Securities
Aug 8, 2017 · 3 min read

When investing in mutual funds, what matters the most is the type of fund you choose to invest in because that’s at the end plays a vital role in generating profit on your investment. But whether you select a small-cap fund, a large-cap or a multi-cap fund, your decision should be based on your personal financial goals, requirements and risk-appetite.

On the contrary to many people’s belief, recent research and historical data suggest that investing in multi-cap funds can prove to be beneficial owing to its ability to improve risk-adjusted returns for the investors. Also, many eminent figures in the industry recommend that the bulk investors’ assets should go towards the multi-cap growth funds. They believe that the diversified nature of multi-cap funds, which invest in companies regardless of size and sector is the safest bet now. Since this kind of fund is not confined particularly to large-cap, mid-cap or small-cap fund but invested in a miscellaneous pool, it can take better exposure to any type of stock at the opportune moment. Like for instance, when valuations of large-cap companies were high in 2015 after the initial correction, multi-cap funds took a great exposure then. On the other hand, when there was an opportunity to invest in quality mid-cap at a reasonable cost in 2013, multi-cap companies did not hesitate to take an exposure either.

Besides this, multi-cap growth funds offer numerous benefits that attract a large number of investors to itself.

Freedom: It goes without saying that the ability to invest in various sectors and sizes of companies through multi-cap funds gives an immense freedom to the investors to pick any stocks among large-cap, mid-cap and small-cap in accordance with their future financial objectives and requirements. This means your portfolio remains less dependent on market cap size when chosen multi-cap funds and is open to a wider scope of growth and asset allocation.

Risk regulator: Unlike large-cap, mid-cap and small cap funds, multi-caps can regulate risks by investing in multiple financial instruments. Thereby, this kind of fund is least affected by the fluctuations of any particular market cap size stock.

Better returns: While investors are in dilemma to choose between large-cap and mid-cap funds, expert fund managers come to their rescue with easy multi-cap fund investment solutions so that the former can benefit in different market conditions. However, all you need to ensure here is that your fund managers should not invest in too many funds to be able to handle. Comparatively, a lesser number of stocks with a wise diversification generate better profit.

Now, the article leads to a conclusion that multi-cap funds can benefit the investors if invested wisely. So, analyze your fiscal background, goals and demands very carefully before the investment and figure out whether at all this kind of fund is suitable to your need. If possible, consult the best multi cap growth fund managers in town who would evaluate your financial portfolio and offer you the best advice.

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