Investing in the Indian financial market can be an overwhelming experience, especially when one has a plethora of fund options. From debt funds to equity funds, the variety of funds available can baffle the most experienced investor.
Table of Contents
Before diving into the ocean of funds, it is essential to have a clear understanding of your financial goals to align them with the correct type of funds.
One of the most popular types of funds in the market is the multicap fund, which is a type of equity fund. Multicap funds are diversified funds that invest in companies of different sizes and sectors.
These funds aim to provide investors with a balanced portfolio across various market capitalizations, ranging from large-cap to mid-cap and small-cap.
Investors who are looking for higher returns than traditional investment options and are willing to take higher risks can consider investing in multicap funds. However, it is crucial to understand the nuances of multicap funds and match the investment goals with the type of multicap funds to generate the desired outcomes.
Best Multicap Funds in India
In the Indian financial market, there are several excellent multicap funds to explore. Some of the best multicap funds in India are SBI Magnum Multicap Fund, Parag Parikh Long Term Equity Fund, Kotak Standard Multicap Fund, and Mirae Asset India Equity Fund.
SBI Magnum Multicap Fund is a popular mutual fund that invests across market capitalizations. It is known for steadily delivering higher returns to investors over the years. The fund has generated returns of 10.64% in the last five years and 19.20% in the last year.
Parag Parikh Long Term Equity Fund is another multicap fund that invests in Indian and foreign equity markets. The fund has a diversified portfolio across small-cap, mid-cap, and large-cap companies. The fund aims to provide long-term capital growth by investing in companies with a sustainable competitive advantage. The fund has generated returns of 11.61% in the last 5 years and 26.08% in the last year.
If an investor is looking for a large-cap focused multicap fund, Kotak Standard Multicap Fund and Tax saving mutual fund could be an excellent option. The fund aims to invest across market capitalizations with a higher bias towards large-cap stocks. The fund has generated returns of 12.09% in the last five years and 21.61% in the last year.
Mirae Asset India Equity Fund is another popular multicap fund that aims to provide long-term capital growth by investing in Indian equity and equity-related instruments. The fund invests across market capitalizations and sectors. The fund has generated returns of 15.31% in the last five years and 32.29% in the last year.
Matching the Investment Goals with Multicap Funds
It is crucial to assess the investment goals before investing in multicap funds. Investors should evaluate the following parameters:
- Investment Horizon: Multicap funds are ideal for investors with a long-term investment horizon. As these are equity funds, they are subject to market risks in the short term.
- Risk Appetite: Multicap funds are equity funds that carry a higher level of risk than traditional investment options. Investors with a higher risk appetite may consider investing in these funds.
- Expected Returns: Multicap funds can generate higher returns than traditional investment options. However, investors should not invest solely based on the expected returns and should assess the risk-reward ratio before investing.
- Diversification: Multicap funds offer diversification across various market capitalizations and sectors, making them an attractive option for investors looking for portfolio diversification.
- Investment Style: Different multicap funds have different investment styles, such as growth-oriented, value-oriented, or a mix of both. Investors should choose a fund that aligns with their investment style.
- Expense Ratio: Investors should select funds with lower expense ratios as they reduce the overall costs and increase the returns.
Conclusion
Multicap funds can provide investors with a diversified portfolio across various market capitalizations and sectors. However, it is essential to match the investment goals with the type of multicap fund to achieve the desired outcomes.
Before investing in any fund, investors should conduct thorough research, assess their investment goals, and measure the risk-reward ratio. Investors must gauge all the pros and cons of trading in the Indian financial market before investing.