Multi Cap Diversified Mutual Funds are those with investments in stocks and companies across market capitalization. It means that the multi cap funds have a portfolio consisting of mid cap, large cap, and small cap companies. These funds thus can take advantage of investment opportunities across market cap.
Due to the very large sphere of investment, the fund can benefit from both value and growth style of investments. Thus in the long run, multicap diversified funds are often better creators of wealth than funds of other categories.
As compared to pure small cap or mid cap funds, multicap funds are less risky and usually not suitable for less aggressive investors. It may however be noted that risk levels associated with these funds can change quickly due to the bigger investment universe. Hence, the fund managers’ capability is of vital importance for the fund to succeed.
Listed below are the best 5 multi cap diversified mutual funds for 2017
- Birla SL Equity Fund
- This multicap fund was launched on Aug 27, 1998. Since then it has returned 24.92 percent per annum. In the past 10, 5, 3, and 1 year, Birla SL Equity Fund has shown 13.33, 23.80, 23.38, and 33.18 percent return, per annum. As of Apr 30, 2017, its asset fund size is INR 5,287 crores, with a 2.20 percent expense ratio as of 31st March 2017.
- It is a five-star fund which in 2016 beat its peers as well as the benchmark by a big margin. The portfolio of the fund is made up of 10 percent investment in money market and debt securities and 90 percent in equities. Large caps make up 65 percent of the portfolio, 25 percent for mid caps, and the rest for small cap stocks. Thus, the aim is to get regular income and capital growth in the long term with investments in stocks that offer consistent and noticeable growth of earnings at reasonable valuations. A part of the fund also involves investments in emerging sectors, IPOs, and other offerings of primary market.
- In the past, the fund has performed better by benefiting most during bull runs, but has not been efficient in containing bear market losses. However, the past cannot be the only criteria for evaluation as it has been managed by different fund managers since launch. The current great performance of the fund can be attributed to its fund manager Anil Shah who took over in 2012.
- Kotak Select Focus Fund Regular Plan
- This multicap fund was launched on Sep 11, 2009. Since then it has returned 15.55 percent per annum. In the past 5, 3, and 1 year, Kotak Select Focus Fund Regular Plan has shown 23.40, 23.85, and 32.33 percent return, per annum. As of Apr 30, 2017, its asset fund size is INR 10,270 crores, with a 2.20 percent expense ratio as of 30th April 2017.
- The fund’s aim is generation of capital appreciation via investments in equity and equity linked securities with more focus on few select sectors that are most likely to beat the targets during any period. The fund usually consists of stocks from 4 to 9 sectors which are chosen on a top-down basis. Investment in mid and small caps is capped at 30 percent and a large chunk of the portfolio consists of large cap company stocks.
- Since its launch period, this multicap fund has outperformed its peers by small margins and the benchmark by significant extent. It has not been tested by extreme bear markets, but in 2011 it was able to contain the losses. The fund is currently managed by Harsha Upadhyaya.
- ICICI Pru Discovery Fund
- This multi cap fund was launched on Aug 16, 2004. Since then it has returned 22.66 percent per annum. In the past 5, 3, and 1 year, ICICI Prudential Value Discovery Fund has shown 23.18, 22.23, and 19.97 percent return, per annum. As of Apr 30, 2017, its asset fund size is INR 17,306 crores, with a 1.88 percent expense ratio as of 31st March 2017.
- This fund aims at investment in companies with growth potential and which are being traded at a price that is lower than its intrinsic value. It is agnostic of market cap; the value of stocks is measured as per comparative market capitalization and price-to-book value. The fund has always maintained a 4 or 5 star rating. Its portfolio was mid caps heavy last year and now it mainly consists of large caps. In the last 5 years, it has been one of the best in multicap category and has outperformed its peers and the benchmark. Mrinal Singh has been the fund manager since 2011.
- Motilal Oswal Most Focused Multicap 35 Fund
- This multicap fund was launched on Apr 28, 2014. Since then it has returned 32.93 percent per annum. In the past 3 and 1 year, Motilal Oswal MOSt Focused Multicap 35 Fund – Regular Plan has shown 32.25 and 35.60 percent return, per annum. As of Apr 30, 2017, its asset fund size is INR 6,543 crores, with a 2.18 percent expense ratio as of 31st March 2017.
- The fund’s aim is achievement of capital appreciation in the long term via investments of not more than 35 equity and equity linked securities across different levels of market capitalization and sectors. The fund has been managed by Gautam Sinha since May 2014.
- Franklin India Prima Plus Fund
- This multicap fund was launched on Sep 29, 1994. Since then it has returned 19.22 percent per annum. In the past 10, 5, 3, and 1 year, Franklin India Prima Plus Fund has shown 14.13, 20.82, 21.08, and 20.09 percent return, per annum. As of Apr 30, 2017, its asset fund size is INR 10,964 crores, with a 2.32 percent expense ratio as of 31st March 2017.
- The fund’s aim is creation of portfolio that offers capital growth and regular dividends with investments in debt, equity, and money market securities with major focus on wealth generating companies whose competitive edge have more potential of greater return on capital. The investment is across different market capitalization levels and sectors. Currently, about 75 percent of the fund is made up of large caps while mid caps make up the rest. The fund has consistently had a 4 or 5 star rating since its launch. Its fund managers are R Janakiraman and Anand Radhakrishnan.