Wondering about the best multicap fund to invest in India? You should first understand the basic concept behind what a multicap fund actually is. These are the funds that deploy investments in companies across sectors and sizes and they decide on the allocation of capital between midsized, large and smaller entities. This flexibility is a game-changer, enabling them to change their portfolios depending on changes in market circumstances. These funds have ample exposure to all major sectors that are currently driving growth of the economy in India and are suitable for an investment duration of more than 5 years on an average. Investing in these funds also does away with the need to purchase various funds for obtaining extensive coverage of the market.
Learning more about multicap funds
Multicap funds are equity based funds that can, in a nutshell, invest throughout various market capitalizations, segments and themes minus any SEBI (Securities and Exchange Board of India) limitations on market exposures. Yet, such funds are required to invest a minimum of 65% of overall assets in equity and equity linked market instruments. Investing in a top multicap fund will help you owing to the flexibility component since fund managers can freely switch exposure to multiple market capitalizations based on market changes or fluctuations as mentioned.
This enables them to leverage opportunities suddenly arising in the market while managing risks related to fluctuating valuations and other fundamental aspects. Through a combination of the stability offered by large cap entities and future growth potential of small and midcap entities, a multicap fund may generate better returns with lower risks in the long term. This will safeguard investors from the risks of changing exposure to various categories of equity funds owing to changing conditions/circumstances in the market.
Best multicap funds to invest in
Along with Motilal Oswal S&P 500 and other renowned options, there are several other multicap funds that you may consider investing in. These include the following:
- Axis Multicap- This fund has offered 4.14% as its average 1 year return and is considered a popular pick for investors.
- SBI Magnum Multicap- This fund has been steadier at 99% for 3 years and 6.43% over 5 years. For a 7 year tenure, returns have gone up to 14.64% as well.
- Edelweiss Multicap- This fund has offered a rate of 49% for a 3-year term. Returns have gone up to 6.22% for a 5-year term.
- ICICI Prudential Multicap- This fund has provided a constant 82% return for a 5 year tenure. For a 7 year tenure, the fund has generated 12.25% as the average return.
- Invesco India Multicap- Returns have touched 10% for a 1-year tenure while they have been 1.10% for a 3-year tenure as well. The 5-year return has touched 4.50% and returns have increased to 15.78% for a 7-year tenure.
- Franklin India Equity- This fund has generated12% returns for a 1-year tenure and 0.29% for the 3rd year along with returns of 3.67% and 13.83% for 5 and 7 years respectively on an average.
- Nippon India Multicap- This fund has touched 07% for a 5 year period and 12.23% for a 7 year period as well.
Top picks for you in the current scenario
The Kotak multicap fund is a good pick in the banking sector as per experienced market investors. It offers 8.05% as the equity multicap average 1 year return along with 5.87% as the 3 year return. The fund looks to zero in on the highest performing business sectors throughout market capitalizations and invests capital in the sectors which are most promising in terms of their future prospects. Stocks are chosen with the bottom-up approach while a top-down approach is used for identifying sectors outperforming the market. Companies that have steadier cash flows and scalable business strategies are usually preferred along with those that have more attractive valuations and efficient allocation of capital.
ICICI Prudential Multicap: This fund deploys investments in high-quality stocks across varying market capitalizations. It attempts identification of entities which can become market leaders in future years. The top-down approach adopted involves identification of various macroeconomic trends and market conditions while the bottom-up perspective is used for stock selection based on factors like cash flow, financial position, corporate governance quality and more.
Motilal Oswal Multicap 35: It is known for its Buy Right: Sit Tight strategy where the former indicates investments deployed in high-quality stocks at comparatively fair valuations while the latter indicates the concept of staying invested for a longer time period for tapping the full market potential of stock across the entire cycle of growth. This scheme may invest in a maximum of 35 equity linked and equity market instruments and looks to restrain the portfolio to 25/30 stocks for combating risks linked to diluted market returns and higher risks resulting from over-diversification.
HDFC Equity; It is a major fund which deploys investments in companies spanning diverse market capitalizations, business sectors and other economic segments, enabling a better balance between rewards and risks. For purposes of selection of stocks, the fund will zero in on companies which can achieve growth that is higher than average levels in the future along with those that have stronger balance sheets and specific competitive advantages.