Understanding Multi-Cap Fund Strategies
When investors think of multi-cap funds, they often imagine a balanced mix: a healthy dose of large-cap stability, with some mid-cap and small-cap growth sprinkled in. That's exactly how asset-allocation rules for multi-cap mutual funds in India are structured.
25%
Min. Small Cap
20%
Flexible Allocation
According to SEBI's mandate, a multi-cap fund must invest at least 25% each in large-cap, mid-cap and small-cap stocks, while the remaining 25% is available for the fund manager to tilt based on opportunity.
But Boldness Isn't Everything
Here's where I, Amol Parakh, urge you to be cautious. Just because a fund tilts heavily toward smaller companies doesn't guarantee superior performance. The data speaks for itself:
WhiteOak Capital
Decent performanceSBI Multi Cap
Top quartile performerDSP Multi Cap
Bottom quartileWhat I draw from this is: exposure alone does not make the fund winner. The critical differentiators are:
Quality Picks
Stock selection matters more than category exposure
Timing
When to allocate matters as much as where to allocate
Risk Management
Portfolio construction protects during downturns
As I often tell clients at Parakh Finserve: Growth potential must be paired with conviction and discipline.
