Performance of Equity multi cap fund

ABSTRACT:

The better returns makes out better investment the Equity multi cap funds provides out
with various fields and has given out the higher level of performance for the past few
years the Equity multi cap fund mutual funds has been growing at faster rate and none
the small investor can make investment and save for the future. The main objective of
this study is find out the maximum returns gained by the top most companies and the
result shows that the maximum level of returns.

KEYWORDS: Returns, Annual Return.

INTRODUCTION

Equity multi-cap funds are mutual funds that invest in stocks across different
market capitalizations, such as large-cap, mid-cap, and small-cap. These funds
provide investors with a diversified portfolio, allowing them to benefit from
the growth potential of companies of different sizes and sectors.

The performance of equity multi-cap funds is largely dependent on various

factors such as the overall market conditions, economic trends, and individual
stock selection by the fund manager. As such, there can be considerable
variation in performance between different funds.

Historically, equity multi-cap funds have delivered relatively higher returns

compared to other equity mutual fund categories, especially during periods of
market volatility. However, this also means that these funds can be more
volatile in the short term.

Investors looking to invest in equity multi-cap funds should conduct thorough

research and analysis of the fund's past performance, investment philosophy,
and fund management team to determine if it aligns with their investment
objectives and risk appetite. It is important to note that past performance is
not a guarantee of future results, and investors should always consult a
financial advisor before making any investment decisions.

What Are Multi Cap Funds?

Multi-cap funds are a type of investment fund that allows investors to gain exposure
to stocks across different market capitalizations. Market capitalization refers to the
total value of a company's outstanding shares of stock, calculated by multiplying the
share price by the number of shares outstanding.

The term "multi-cap" in the context of funds indicates that the fund manager has the
flexibility to invest in companies of various sizes, including large-cap, mid-cap, and
small-cap stocks. This approach enables the fund to diversify its portfolio across
different market segments.
Multi cap funds are required to hold at least 75% of their assets in equity and equity
related instruments at any point in time. The portfolio must allocate at least 25% of its
assets to large-cap stocks, 25% to mid-cap stocks, and another 25% to small-cap stocks.
This fund stands out due to its flexibility and diversification across all sectors and
capitalizations.

Types of Multi Cap Funds ?

Multi cap funds can be classified into three categories. These are as follows

 Multi Cap Funds With Focus on Large-Cap Stocks: These funds focus on
investing across large-cap companies and then look for opportunities in mid
and small-cap companies.
 Multi Cap Funds With a Focus on Mid/Small-Cap Stocks: These funds
explore good opportunities in the mid and small-cap sector and then move on
to large-cap stocks to protect the portfolio from any downside risk.
 No Specific Focus on Market Capitalization: These types of funds explore
investment opportunities across market capitalization and focus on finding
stocks that can outperform.

How Do Multi Cap Funds Work?

Diversification: Multi-cap funds invest in stocks of companies with different market capitalizations,
sectors, and industries. This diversification helps reduce the risk of losses due to the performance of
one sector or company.
Investment Strategy: The fund manager decides the allocation of funds in large-cap,
mid-cap, and small-cap stocks based on their investment strategy. Some funds may
have a bias towards a particular market segment, while others may invest in
companies across all segments.

Market Conditions: The allocation of funds across different market segments may
vary depending on the prevailing market conditions. For example, in a bull market,
the fund manager may allocate more funds towards mid-cap and small-cap stocks,
while in a bear market, the focus may shift towards large-cap stocks.

Returns: The performance of multi-cap funds is dependent on the performance of

the stocks in their portfolio. The returns generated by multi-cap funds may vary
depending on the allocation of funds and the market conditions.
Expense Ratio: Like all mutual funds, multi-cap funds charge an expense ratio,
which is the fee charged by the fund house for managing the fund. Investors should
pay attention to the expense ratio, as it can affect the overall returns generated by
the fund.

However, in the case of multi cap funds, there is no definite structure (set by
regulation) regarding the size and sector of companies it can invest in. Thus, these
funds can invest in large-cap, mid-cap and small caps. Here, the proportion can vary.

, multi cap mutual funds must have at least 75% of their assets in equity and
equity-related instruments. In addition, the portfolio must allocate a minimum of
25% of its assets to large-cap stocks, 25% to mid-cap stocks, and another 25% to
small-cap stocks.

Advantages Equity Multi cap funds

 Diversification: Equity multi-cap funds invest in companies across different

market capitalizations , which helps in diversifying the portfolio. This reduces
the risk of losses due to market fluctuations.

 Flexibility: Equity multi-cap funds offer the flexibility to invest in companies

of different sizes, depending on the prevailing market conditions. This allows
fund managers to adjust their portfolio to take advantage of market
opportunities.

 Long-term growth potential: Multi-cap funds invest in companies of

different sizes, including small, mid, and large-cap companies. This
diversification helps in generating long-term growth, as small-cap companies
tend to grow faster than large-cap companies, while large-cap companies
offer stability.
  Potential for higher returns: As multi-cap funds invest in companies of
different sizes, they have the potential to generate higher returns than funds
that invest only in large-cap companies.

 Lower risk than small-cap funds: While small-cap funds may offer higher
returns, they also carry a higher risk due to the volatility associated with
small-cap stocks. Multi-cap funds reduce this risk by investing in companies
of different sizes.

 Active management: Equity multi-cap funds are actively managed, which

means that the fund manager is constantly monitoring and adjusting the
portfolio to maximize returns and minimize risks.

Literature review:
Bialkowski and otten (2011) in their study focused on the size issue; analyzing that
performance of mutual fund are positively related to amount of assets under management.

Sarish and Jain (2012) mentioned that investors in have miscellaneous avenues for
investment in mutual funds and financial instruments such as equity shares. Bonds ,
debentures, etc but the most problematic situation is that most of these investor are
unaware about these investment options.

Rathnamani (2013) focused on analyzing the investment preference on mutual funds

against other investment avenues by citizens of Mathura” . he stated that “ investment
prefer to invest in mutual funds on account of higher return with relatively lower risks”.