Best 3 Multicap Mutual Funds for SIP in 2019
Markets very volatile these days. As I mentioned in my earlier article (3 Top Reasons For Why We Can Expect A Big Market Crash Imminently), the NiftyPE should come below 20. Currently the latest NiftyPE ratio is around 24. Hence, the Market volatile will sustain some more days until it settle below 20.However, it is not suggested to enter directly into Markets for new Investors or small Investors. It is always better to choose Mutual funds through SIP approach. There are several categories of Mutual funds available in the market. Based on the Investor’s risk profile and their Saving strategies, one should select the right category for their investment goals. Here we are going to discuss about Multicap Mutual funds. There are certain reasons to choose Multicap Mutual funds which suits to specific financial goals.
What are Multicap Mutual Funds?
These are diversified mutual funds which can invest in stocks across market capitalization. In other words, they are market capitalization agnostic. These mutual funds primarily invest in stocks selected from all the listed stocks (Large cap / Mid cap / Small cap) in the Indian market (NSE/BSE).
Why Multicap Mutual Funds:
- Diversification: Markets are cyclical between their components. Sometimes large caps do well, sometimes mid caps and sometimes small caps. When the markets correct, Small caps crumble more and Midcaps struggle but Large caps prove to be more resilient. If you have a multi-cap fund, you will have exposure to companies of different sizes and you will be reasonably diversified with simplicity.
- Flexibility: As the Portfolio can consist all Cap stocks (Large cap / Mid cap / Small cap), the Fund Manager having the flexibility to choose the best stocks from all these cap stocks. This flexibility allows the fund manager the ability to manage market risk efficiently.”He will be having lot of choices to build the Portfolio.
- For Long-Term Goals: Multi-cap funds are better placed to exploit the opportunities and manage risk arising out of future corrections or upward rallies.To meet any of your long term goals such as your children’s Higher education or Marriage etc., the Multicap stocks are best to choose. As your Time horizon is more than 5 years in the case of Long term goals, the volatility will be averaged and will achieve more returns in the case of Multicap Mutual funds.
- Moderate Risk Appetite: Since the Multicap Mutual fund scheme invests in mid or small cap stocks along with Large-cap stocks, it is riskier than large cap schemes that invest predominantly in very large companies. However, because of the exposure to mid and small cap stocks, multi-cap schemes are comparatively riskier and can also offer higher returns. The Large-cap exposure will provide better moderate risk to the Investor when compared to pure Mid-cap or Small-cap Mutual funds.
- Lowest SIP: These funds are a good way to take exposure to broader equity segment by means of nominal systematic investment plan (SIP) of as low as Rs 500 to begin with. Investors who don’t want to get into the trouble of stock-picking or deciding which market capitalization fund would suit them may go for multi-cap funds as a starter.
Best 3 Multicap Mutual Funds to Invest through SIP in 2019:
While selecting a good Multi-cap Mutual fund, you need to analyze the fund from different angles. There are various quantitative and qualitative parameters which can be used to arrive at the best multi-cap funds as per your requirements. Additionally, you need to keep your financial goals, risk appetite and investment horizon in mind. I have considered the following parameters in selecting the Best Multi cap Mutual funds:
- Last 5 years Track Record
- Funds which are having 500 Cr+ NAV
- Funds from famous and reliable Fund Houses
- Funds which are having STP (Systematic Transfer Plan) facility
- Funds stable performance during Market ups and downs
Considering the above factors, I have chosen the following are the best Multi-cap Mutual funds to invest through SIP approach in 2019:
1. Axis Focused 25 Fund:
This is one of the best Multi-cap Mutual fund on its category. Since last 3 years, it is performing extremely well. Launched in 2012 and the current NAV is Rs. 5853 crores. This shows the how successful this fund is. The scheme seeks to generate long term capital appreciation by investing in concentrated portfolio of equity & equity related instruments of upto 25 companies, primarily in companies among the top 200 in terms of market capitalization. Top 5 sectors include Financial, Automobile, Technology, Services and Chemicals. All these sectors are promising sectors in the coming years also. Hence, you can expect continued performance levels from this fund in the near future also. Top 5 companies in its portfolio include TCS, HDFC Bank, Kotak Mahindra Bank, HDFC and Maruti. The portfolio includes 89% in Equity and the remaining in Debt instruments. In Equity portion, 82% includes Large-cap and the remaining in Mid & Small-cap Mutual funds. Hence, you can expect the Moderate to safe risk as compared to Large-cap Mutual fund.
2. Mirae Asset India Equity Fund:
My second choice in this category. Launched in 2008 and with NAV of more than Rs 8000 crore, Mirae Asset India Equity fund is one of the consistent performer in its category. The scheme aims to maximize long term capital appreciation by finding investment opportunities resulting from Indian economic growth and its structural shifts through investing in equity and equity related securities.From the last 5 years, it is consistently performing and yielding the good returns compared to any Diversified Equity Mutual fund. Top sectors include Financial, Energy, Automobile, Technology and FMCG. All these sectors are high demand sectors and will expect to continue the performances in future also. Top companies include HDFC Bank, RIL, ICICI Bank, Infosys, TCS and Kotak Bank. 99% of its portfolio includes in Equity and the remaining in Cash. 85% of its Equity portion includes in Large-cap and the remaining in Mid and Small-cap companies. Hence, it is relatively aggressive when compared to Axis Focused 25 Fund. Risk is Moderate to High.
3. SBI Focused Equity Fund:
This is one of the oldest and very good Multi-cap Mutual fund. Launched in 2004 and with NAV of more than Rs.3000 crore, it is one of the good consistent performer from last 10 years. The scheme seeks to provide the investor with the opportunity of long-term capital appreciation by investing in a concentrated portfolio of equity and equity related securities. Financial, Healthcare, Services, Chemicals and Engineering are the top sectors. Some of the sectors are not performing good in the
recent times, hence the performance of this fund lagging comparatively in its category. However, these sectors are expecting to do well in the coming days, one can expect good yieldings in the coming years. Top 5 companies in its portfolio includes P&G, HDFC Bank, Divis Labs and Bajaj Finance. 95% of its portfolio includes in Equity and the remaining in Debt. Out of its Equity portion, 50% in Large-cap and the remaining in Mid & Small cap companies. Risk is moderate to high in this fund.
Multicap Mutual funds are best suitable for Long term goals as it is involved moderate to high risk. Selecting a good Multicap Mutual fund and investing through SIP approach would certainly meet your long-term goals.