1. It's undeniable that top mid and small cap funds have outperformed top multicap funds for several years.
2. In a vibrant emerging economy like ours, good funds in these categories may continue to outperform, albeit with a higher risk as they focus on smaller cap companies, hoping that they will turn into multi-baggers over the years.
3. On the other hand, the purpose of a multi-cap fund is to provide a diversified portfolio, by giving access to Capital and Money Market instruments in a single fund itself, within their AMC's internal mandate, with various levels of volatility and returns.
4. But, multi-cap funds do lose utility for those who strictly follow, understand and take investment decisions based on an asset allocation made with their own risk profile in mind, as they will find it difficult to fit these funds in it due to ever-varying presence across market capitalisations and sectors in different market cycles.
5. Therefore, a large, well-diversified and actively managed portfolio may not hold multi-cap funds, but for a smaller and simple portfolio, they make an excellent investment option, albeit with a relatively lesser, but steadier returns, essential for a safer growth-oriented wealth creation from limited monthly resources.
2. In a vibrant emerging economy like ours, good funds in these categories may continue to outperform, albeit with a higher risk as they focus on smaller cap companies, hoping that they will turn into multi-baggers over the years.
3. On the other hand, the purpose of a multi-cap fund is to provide a diversified portfolio, by giving access to Capital and Money Market instruments in a single fund itself, within their AMC's internal mandate, with various levels of volatility and returns.
4. But, multi-cap funds do lose utility for those who strictly follow, understand and take investment decisions based on an asset allocation made with their own risk profile in mind, as they will find it difficult to fit these funds in it due to ever-varying presence across market capitalisations and sectors in different market cycles.
5. Therefore, a large, well-diversified and actively managed portfolio may not hold multi-cap funds, but for a smaller and simple portfolio, they make an excellent investment option, albeit with a relatively lesser, but steadier returns, essential for a safer growth-oriented wealth creation from limited monthly resources.