Invest in a multi-cap fund for high allocation to mid- and small-cap stocks

Beware that these funds will be more volatile than other diversified equity categories, barring mid-cap and small-cap funds

The new fund offers (NFOs) of multi-cap funds from HDFC Mutual Fund and Axis Mutual Fund are on currently. While the former’s NFO will close on December 7, the latter’s will end on December 10.

The Securities and Exchange Board of India (Sebi) had altered the characteristics of multi-cap funds in September 2020 to make them more true-to-label. These funds must have a minimum 25 per cent allocation each to large-cap, mid-cap, and small-cap stocks, while the balance 25 per cent can be invested dynamically. At present, this is a small category whose average asset under management (AUM) stood at