 "mutual funds, MFs")
It's the season of multi-cap funds. These type of mutual funds diversify across large, mid and small-cap companies. Market regulator Sebi has mandated that such funds must have a minimum of 25% allocation each to large, mid and small cap companies at all points of time, leaving room for the balance 25% to be invested in any of the three market-caps based on the fund manager’s choice.
Edelweiss Mutual Fund has launched the Edelweiss Multi Cap Fund, open-ended equity scheme investing across large cap, mid cap, small cap stocks.
The fund will invest in equity and equity-related instruments, allocating a minimum of 25 per cent and a maximum of 50 per cent to each large-cap, mid-cap, and small-cap categories. The total allocation in equity and equity-related instruments, encompassing all three types, will be between 75 per cent and 100 per cent.
The new fund offer of the scheme opened for subscription on 4 October and closes on 18 October 2023. The scheme re-opens for continuous sale and repurchase on or before November 02, 2023.
The primary objective of Edelweiss Multi Cap Fund is to generate long-term capital appreciation by investing in a diversified portfolio of equity & equity-related instruments across large cap, mid cap and small cap stocks. The scheme will be benchmarked against NIFTY 500 Multicap 50:25:25 Index TRI.
Edelweiss Mutual Fund’s investment framework assists in selecting sound companies that are offered at reasonable rates without favouring either value or growth investing strategies. The company will use the forensic framework and prioritise reasonably priced businesses with medium-term earnings potential. The investment approach will remain style-agnostic, focusing on well-managed companies with scalable opportunities and superior returns on capital employed, aiming for sustained long-term returns.
"India is set to embrace a promising decade of growth, driven by a dynamic and affluent young demographic, a thriving digital economy, improving exports, infrastructure enhancements, and improved credit accessibility. We believe that our experience in successfully managing mid and small-cap strategies over the last 15 years through bottom-up stock picking will prove to be an edge while managing a multi-cap fund, which has a higher tilt towards this segment," said Radhika Gupta, MD & CEO, Edelweiss Mutual Fund.
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This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme. The “Exit Load” would be charged as per the following:
If the units are redeemed /switched out on or before 90 days from the date of allotment – 1% of the appliable NAV.
If the units are redeemed /switched out after 90 days from the date of allotment – NIL.
Small and mid-cap segment provides higher Alpha generation opportunities since it has the availability of a broad spectrum of diversified and niche businesses.
Value research recommends that those investors who can handle the volatility that comes with 50 per cent allocation to mid- and small-cap stocks, should opt for a multi-cap fund. Otherwise you can opt for a flexi cap fund which, on average, has only 25-30 per cent allocation to mid- and small-cap stocks.
Several asset management companies (AMCs) have launched such multi-cap funds, thus, allowing inclined investors to avail of returns corresponding to the total returns of the securities in this particular index. Some examples are Nippon India Multicap Fund, ICICI Prudential Multicap Fund, Invesco India Multicap Fund, Sundaram Multi Cap Fund etc.
How multi-cap funds have performed in the last six months to 5 years
