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All You Need To Know About Multi-Cap Funds

Find out more about Multi-cap funds. Invest in the best handpicked mutual funds using Cube.
November 16, 2020

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Mutual Funds have become a famous investment choice among several investors. But let’s be honest, all this talk about caps can get a bit confusing and difficult to keep up with. Small-call, mid-cap, large-cap, multi-cap… I am here to tell you that you need not worry.

This blog will tell you everything you need to know about multi-cap funds so that you can invest with confidence. To start with, let’s understand exactly what multi-cap funds are. 

Check out our blogs on:

1. Small Cap Funds

2. Mid Cap Funds

3. Large Cap Funds

What Are Multi-Cap Funds?

Imagine if you could invest in multiple stock options across caps or all the stocks listed in the NSE/BSE. That is exactly what multi-cap funds do. As the name suggests, they are equity mutual funds that primarily invest in stocks of companies that fall in small-cap, mid-cap, and large-cap categories. The proportion of investment in each category depends on the objective of the fund.

Multi-cap funds are a suitable option for long term wealth creation for investors with a moderate risk appetite.

Who Should Invest In Multi-Cap Funds? 

Investing in multi-cap funds depends on factors such as portfolio allocation, risk levels, investment goals, etc. But multi-cap funds have certain benefits that appeal to investors such as:

  • Investing across multiple caps allows the fund to diversify its investments and get the best out of each cap
  • Small-cap and mid-cap investment risks are balanced out with the large-cap investments
  • Multi-cap funds are less volatile than small-cap and mid-cap funds
  • Multi-cap funds can offer potentially higher returns than large-cap funds

Wondering how to build a perfect portfolio? 

What Are The Risks Of Investing In Multi-Cap Funds?

Although multi-cap funds are a good option for investors with a moderate risk appetite, these funds carry risks such as:

  • Multi-cap funds are prone to market fluctuations just like other funds
  • Small-cap and mid-cap funds might increase volatility to multi-cap funds
  • The Fund Manager’s judgement is crucial to get the best out of multi-cap funds
  • These funds are not suitable short term investments

Should You invest In Multi-Cap Mutual Funds?

Investing in any mutual fund scheme should depend on your investment goals and the risk that you are willing to take. Even if you are a new investor or an experienced one, consulting a wealth coach can help you invest based on your needs. 

With that being said, multi-cap funds are suitable for investors looking for long term wealth creation options with a balanced risk and reward ratio. Since multi-cap funds invest across market caps, the fund manager can reallocate investments in small-caps, mid-caps or large-caps depending on market trends.

Cube has made it easy for you to invest in mutual funds through the Quick SIP feature. You can browse various risk levels and get recommendations based on your needs all while starting with an investment amount as low as ₹1000. Why wait when you can download the Cube Wealth app today to know more?

Not much of a reader? Check out this video on how Cube helps you invest in the best mutual funds.

Shriram Shekhar
Shriram is a Consultant at CubeWealth. He has developed cutting edge IT products for over 2 years before turning to his passion for the written word. His love for philosophy, developing products, and empowering people through quality content is what got him to CubeWealth.

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