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Diversified Equity Funds

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What is a Multicap Equity Scheme?

A Multicap Equity Mutual Scheme is one which invests its assets across all market capitalisations within equity and equity-related securities.

So, they are marketcap agnostic.

These type of schemes are good for investors who do not have the expertise or time to track the stock market regularly.

These scheme allow the fund manager to invest the scheme money across different market capitalisations depending on the opportunities available in the market at that point of time.

He has a free hand and a lot of flexibility in selecting the companies.

In general, this type of schemes invest all their monies into the equity market at all times and very little money is held in cash or cash-equivalent instruments.

This is mostly done because the fund manager will find some or the other opportunity in the 6000+ listed companies available in the stock market.

An investor who wish to avoid complete equity exposure at all times would probably prefer a Dynamic Asset Allocation Funds where in the fund manager allocates funds to Equity or Debt depending on the prevailing market opportunities. This will, however, be more of a conservative approach to investing.

These schemes will often have a broader index as their benchmark index.

Take for example, SBI Magnum Multicap Fund which takes BSE-500 as its benchmark index.

Diversified funds and large AUM

  • Too small AUM is troubling and too huge AUM is troubling as well.
  • When the scheme is too small, expense ratio / fund management charges will be high
  • Because of its low AUM (and obviously low SIP money coming in), in a down trending market, the fund manager might find opportunities to buy but the scheme might not have cash.
  • On the other hand, if the scheme AUM is too high, finding opportunities in accordance to the scheme mandate will be difficult. We have seen this problem in the case of DSPBR Microcap Fund because it invests only in smallcap stocks.
  • ICICI Prudential Value Discovery Fund is a multicap fund with AUM of 15588 cr.
  • Yes. It has large AUM but I do not think it worrisome becuase it has an experienced fund manager who has the freedom to invest across all marketcaps and is not restricted to only one marketcap.
  • ICICIPru Value Disco falls between HDFC Equity Fund has AUM of 16653 Cr and Franklin India Prima Plus Fund with 9930 Cr in this category. These are the top 3 schemes
  • So. Yes. Continue your SIPs
  • Dated: Feb 21, 2017

Multi cap funds constitute 30% of equity AUM

Multi cap funds have the highest AUM among equity funds, shows data collated from Value Research Online. We have excluded the AUM of the arbitrage funds category from the AUM of equity funds due to its short-term nature. Multi cap funds invest in stocks based on the market conditions irrespective of their market capitalisation. This gives multi cap funds a flexibility edge over other categories of equity funds such as large, mid and small cap funds as these funds have a more restricted pool of stocks based on market capitalisation.

Value Research shows that multi cap funds have AUM of Rs.1.52 lakh crore as on August 2017. These funds account for 30% of the equity AUM.On the other hand, large cap funds have AUM of 1.36 lakh crore while mid cap funds manage assets of worth Rs.1.26 lakh crore.

Source: Wise Money dated 2 - 5 October 2017

Popular Multicap Equity Schemes

The below list is partial and is in no specific order. Just mentioning the names of the schemes. Should not be treated as preferred schemes.

  • Axis Focused 25 Fund
  • Axis Multicap Fund
  • BOI AXA Equity Fund
  • BNP Paribas Equity Fund
  • Canara Robeco Equity Diversified Fund
  • Essel Equity Fund
  • DSP BlackRock Equity Fund
  • DHFL Pramerica Diversified Equity Fund
  • BNP Paribas Equity Fund
  • IDFC Focused Equity Fund
  • IDFC Classic Equity Fund
  • L&T Equity Fund
  • Motilal Oswal Multicap 35 Fund
  • Parag Parikh Long Term Equity Fund
  • Reliance Equity Opportunities Fund
  • Tata Equity PE Fund
  • ICICI Prudential Multicap Fund
  • IIFL India Growth Fund

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