Diversification is one of the cornerstones of strategic investing, allowing you to spread risk and access growth potential across multiple areas.
A mutual fund that offers exposure to a vast spectrum of companies through a single avenue is the multi cap mutual fund. By investing across market capitalisations – large cap, mid cap and small cap – such funds seek to balance growth potential with risk mitigation.
The latest entrant in this segment is the Bajaj Finserv Multi Cap Fund, which is now open to investors for the first time. The New Fund Offer (NFO) period began on Thursday, February 6th, 2025, and is on until Thursday, February 20th, 2025. To help you better understand this scheme and the opportunities it provides investors, this article tells you more about multi cap funds and what sets the Bajaj Finserv Multi Cap Fund apart from others in this space.
What are multi cap funds?
Multi cap funds are equity mutual funds that invest in stocks of large cap, mid cap, and small-cap companies. This diversification helps in balancing the relative stability of large and well-established firms with better long-term growth potential of smaller companies.
According to regulatory guidelines, multi cap funds must invest at least 25% each in large-cap, mid-cap, and small-cap stocks, ensuring balanced and disciplined exposure to all three market segments at all times.
How do multi cap funds work?
Here are some key features:
- Large-cap exposure: Large-cap companies are those listed between 1 and 100 on the stock exchange in terms of market capitalisation. These are typically well-established businesses with strong financials and a track record of robust growth. These stocks help provide relative stability to the portfolio, mitigating risk.
- Mid-cap exposure: Mid cap stocks belong to companies that are listed between 101 and 250 on the stock exchange in terms of market capitalisation. These companies are often in the expansion phase, and can offer better long-term returns than large caps, but carry higher risk and are more vulnerable to volatility.
- Small-cap exposure for high growth: Small-cap companies are emerging businesses that can offer the potential for long term growth if they perform well. However, they are also significantly more volatile compared to large and mid-cap stocks.
Advantages of multi cap funds
- Diversification: Since these funds invest in companies of different sizes, they help capture growth opportunities in various market conditions while mitigating risk. However, volatility risk still exists, especially with small and mid cap segments of the portfolio.
- Active management: The portfolio is managed by investment experts, who track the market and buy or sell stocks in the portfolio based on market conditions, stock fundamentals and their insights.
- Suitable for long-term wealth creation: These funds can offer capital appreciation over the long run due to exposure to equities.
What’s unique about the Bajaj Finserv Multi Cap Fund?
The Bajaj Finserv Multi Cap Fund stands out in this space with its contrarian investment strategy. Contrarian investing seeks to ignore market noise and invest in stocks that are being overlooked or undervalued by others.
Instead of going with the crowd, contrarian investors go against market sentiment, aiming to buy stocks at reasonable prices and capture growth potential over time as market realises the intrinsic value of these securities. Its central tenet is ‘Buy when others sell and sell when others buy’.
Here are some of its benefits:
Here are a few benefits of contrarian investing:
- Opportunity to buy undervalued stocks – Contrarian investors often buy stocks that are undervalued due to temporary market pessimism, capturing these opportunities at reasonable prices.
- Potential for high returns in long term – By going against the crowd and investing in overlooked or out-of-favour or undervalued stocks, contrarian investors can benefit from price corrections when the market realises the intrinsic value of these assets.
- Lower competition – Since most investors follow popular trends, contrarian investors face less competition when buying stocks, allowing them to enter at reasonable rates.
Bajaj Finserv Multi Cap Fund NFO details
The Bajaj Finserv Multi Cap Fund NFO (from Thursday, February 6th, 2025, to Thursday, February 20th, 2025) offers investors an opportunity to participate in the scheme for the first time. Units are available at the face value of Rs. 10 each during the NFO. The scheme will reopen for subscription on or before March 3rd, 2025, when units will be available at the prevailing Net Asset Value.
You can invest in the Bajaj Finserv Multi Cap Fund either online or offline. You can invest directly through Bajaj Finserv AMC or through a registered mutual fund distributor. You can also invest through the Registrar and Transfer Agent KFintech or through aggregator platforms.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
Disclaimer: No Business Standard Journalist was involved in creation of this content