Multi-cap schemes seen gaining investor favour in recent months

The ‘multi-cap’ schemes — that invest at least a fourth of their corpus in large-caps, small-caps and mid-caps — have gained investor favour in recent months. The assets under management (AUM) for this equity sub-category have soared 66 per cent to Rs 44,516 crore in the past six months.

In December, the multi-cap funds saw the highest net inflows among all equity sub-categories at Rs 10,577 crore. The inflows were propelled by three new fund offers (NFOs) Axis Multicap fund, HDFC Multicap Fund, and IDFC Multicap Fund, who collectively mobilised Rs 9,509 crore. In January, inflows came in at around Rs 900 crore in absence of any NFOs.

Flows could once again accelerate this month as the country’s largest fund house SBI MF has announced the launch of SBI Multicap Fund.

Earlier, multi-cap schemes invested across market cap without any fixed commitment. However, schemes with such attributes were termed as flexi-cap. Most fund houses re-labelled their existing multi-cap schemes as flexi-cap. Many are now launching multi-cap schemes that meet new regulatory guidelines.

Market participants say equal diversification across the market caps and recent outperformance is leading to investors' interest towards multi-caps.

The data from Value Research shows the multi-cap fund has given average returns of 31 per cent in the last one year. In comparison, large-cap funds and flexi-cap funds have given average returns of 18.6 per cent and 21.9 per cent.

“We believe multi-cap funds are an ideal investment option for investors who would like a mix across market cap as they provide diversification of opportunities and growth potential while getting the benefit of limiting downside risk,” said DP Singh, chief business officer, SBI MF.