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Tata Capital > Blog > 5 Reasons Why Your Portfolio Needs Multi-Cap Funds

5 Reasons Why Your Portfolio Needs Multi-Cap Funds

5 Reasons Why Your Portfolio Needs Multi-Cap Funds

Deciding on the right financial investment can be tricky. You’ll often end up contemplating whether to go for high returns by investing in start-ups through small and mid-cap funds. Or whether you should focus on stability over aggressive growth by investing in large-cap funds.

But, what if you could invest in small, medium and large-cap funds simultaneously? Through multi-cap funds, you can! Multi-cap funds invest majority of their corpus in stocks of companies with varying market capitalisations. Essentially, these funds house stocks of small, medium and large enterprises.

5 reasons to include multi-cap funds in your financial portfolio

Here is why you should add multi-cap funds to your financial portfolio:

1. Awards flexibility

Unlike small, mid, and large-cap funds that restrict investors by letting them invest in either small, mid, or large companies, multi-cap comes with no such restriction. Not only do these funds find growth opportunities across diverse industries, but also company sizes. Therefore, opting for these funds truly diversifies your financial portfolio.

2. Mitigates risk

Individuals understand the investment risks in start-ups, but they're also aware that investing in them can earn high returns. Therefore, they want to invest a chunk in small and medium companies, but not without securing the majority corpus in large-cap organisations. And, multi-cap funds allow them to do that, thus lending stability to the entire portfolio without culling the chance of substantial returns.

Additional Read -What Are Multi-cap Funds?

3. Professionally managed

These funds are professionally managed by expert fund managers whose sole aim is to identify excellent financial opportunities for diversification. This boosts your chances of earning higher returns. So, all you have to do is pick from an assortment of highly-rated multi-cap mutual funds (MFs) that already house handpicked stocks of companies.

4. Stability across diverse market cycles

The stock market can be a volatile place, which is why you need instruments that absorb sudden fluctuations and still maintain a strong position. Multi-cap stocks are one such investment vehicle. Given that fund managers choose stocks from diverse sectors and sizes, your entire multi-cap portfolio won't fluctuate even if one industry underperforms.

5. Substantial returns

If you're not a high-risk investor but want to earn sizeable returns, invest in multi-cap funds. Here the returns won't likely be as high as some small or mid-caps promise, but you won't risk swaying too low. No wonder individuals who can stomach moderate to high risk also diversify their portfolios by investing in multi-cap funds.

Additional Read - With the new SEBI rules, are Multi-cap funds worth the risk?

The bottom line

Newbie investors are often confused about whether to invest in small, mid or large-cap funds. We say, try multi-cap. This way, you don't start by risking too much at the same time and also get a taste of the market.

Want to invest in multi-cap funds online? If so, do it via Tata Capital Moneyfy. On our portal, you can compare across diverse categories of MFs, including multi-cap funds. If you want to invest indirectly into MFs, start a systematic investment plan through our website for as little as Rs. 500 per month.

Want to invest on the go? Download our Moneyfy app, and start your investment journey today!

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