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Multicap funds are a good option if you want to invest in large, mid and small cap companies at the same time. Multicap funds are diversified mutual funds. Market regulator Sebi changed the definition of multi cap only last year. Companies will have to invest a minimum of 25% each, in large, mid and small caps. Earlier there was no cap limit in multicap schemes. Now 75% will be fixed according to the cap and the fund manager will be able to change the investment of the remaining 25%.
According to Harsha Upadhyay, Chief Investment Officer Equity, Kotak Mutual Fund, the Multicap scheme is suitable for investors who want to invest for a long time. This scheme should have a 3 to 5 year perspective. The allocation limit in the fund is pre-determined, so whether the market goes up or down, the exposure of the fund remains the same.
If there will be a fall in the large cap, then the returns will be balanced from the mid cap or small cap. Similarly, if there is a fall in the mid cap or small cap category, then the large cap will balance it. A 25% of investment will be dynamic.
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