Imagine you have a big basket where you collect apples (big companies), oranges (medium companies), and cherries (small companies). Instead of picking just one type of fruit, you mix them for better health. Multi Cap Mutual Funds are like this fruit basket. They invest in big, medium, and small companies to spread the risk and give you more chances to grow your money over time.
What are Multi Cap Funds?
Multi Cap Mutual Funds invest in equities across various markets, including small, mid, and large-cap stocks. This approach helps fund managers adapt to market conditions and seize growth opportunities, providing you with a balanced risk-return profile and the potential for long-term capital appreciation.
Features of a Multi Cap Fund
- Diversification: Invests across small, mid, and large-cap stocks, spreading risk and increasing potential returns.
- Regulatory mandate: Requires at least 75% of assets in equities, with a minimum of 25% in each market cap category.
- Long-term growth potential:Aims for capital appreciation over time, suitable for investors with a long-term horizon.
Benefits of investing in a Multi Cap Mutual Fund
- Reduces the overall risk due to diversified investments.
- Allows different investment styles and risk appetite to be used so fund managers can capitalise on various growth opportunities.
- Professionals manage funds, ensuring investment decisions are based on thorough research and analysis.
How should you invest in a Multi Cap Mutual Fund?
1. Decide your goals: Identify your financial objectives and research for mutual funds accordingly.
2. Research funds: Select funds based on performance history, expense ratios, and fund manager expertise.
3. Choose investment method: Decide between a lump sum investment or a SIP.
4. Complete KYC: Ensure you have the necessary KYC documents ready for verification.
5. Invest: Select the fund, fix your investment amount, and initiate the transaction.
Taxation rules of Multi Cap Mutual Funds
- Short-term capital gains (STCG): Gains from units sold within 12 months are taxed at 20% p.a.
- Long-term capital gains (LTCG): Gains over ₹1.25 lakh are taxed 12.5% p.a. for units over 12 months.
- Dividend taxation: Dividends are taxed according to your income tax slab.
Also Read: Know all about NAV in Mutual Funds
FAQs
What are Multi Cap Mutual Funds?
Multi Cap Mutual Funds invest across various market capitalisations, including small, mid, and large-cap stocks.
What does a Multi Cap Mutual Fund invest in?
A Multi Cap Mutual Fund invests in a mix of large-cap, mid-cap, and small-cap stocks, ensuring investments in different market sectors. This balances potential returns while managing risk effectively.
What is the investment time horizon for a Multi Cap Mutual Fund?
The recommended time horizon for a Multi Cap Mutual Fund is 5 years and above.
Is SIP or lumpsum better for Multi Cap Fund investments?
SIPs help in regular investments and mitigate market timing risks, while lumpsum can yield higher returns if invested during favourable market conditions.
How much money do you need to start investing in Multi Cap Mutual Funds?
You can start investing in Multi Cap Mutual Funds with as low as ₹100 through an SIP. Lumpsum investments require a minimum of ₹1,000 to ₹5,000, depending on the fund’s specific terms.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
Mutual Fund investments are subject to market risk, read all scheme related documents carefully. Axis Bank Ltd is acting as an AMFI registered MF Distributor (ARN code: ARN-0019). Purchase of Mutual Funds by Axis Bank’s customer is purely voluntary and not linked to availment of any other facility from the Bank. T&C apply.
