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Multi Cap Funds

These funds invest in stocks across market capitalization. That is, their portfolio comprises large-cap, midcap, and small-cap stocks. The fund manager has relatively more freedom and they can choose a stock from a much broader range. Hence, the stock selection skills of fund managers become very important. The minimum investment in equity & equity related instruments – 75% (as per new circular) of total assets. However, the SEBI has come up with a new circular for making multi-cap category funds even more vibrant, where the SEBI has made a minimum investment of 25% in each category i.e Large, Mid, and Small.

Suitability:

Investors who are looking to invest money for at least 5 years and are looking for high returns. Such funds can experience moderate to high volatility due to movement in stock markets or due to the specific stock selection methodology of the fund house. It is recommended to use a systematic investment plan (SIP) for recurring monthly investments or a systematic transfer plan (STP) for investing lumpsum in these funds.

Minimum Investment:

The minimum investment varies from scheme to scheme. It could range between Rs.100 to Rs.5,000.

Taxability:

Multi-Cap Funds receive the same tax treatment as other equity funds.

  • Short term capital gain (less than one year): 15% of gain
  • Long term capital gain (more than one year): 10% of gain in excess of Rs. 1 lakh per year
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