Multi Cap Mutual Funds

The main advantage of investing in multi-Cap Funds are that they invest a minimum 25% allocation of their total corpus in large-cap, mid-cap, and small-cap companies which helps in diversification of portfolio and will as reduces the risk as your money is invested in multiple sectors across different market capitalization. 

You must analyse the fund’s portfolio, past performance, expense ratio and performance of fund managers to choose the best-performing multi cap mutual fund.

Multi-cap mutual funds invest 75% of the total asset in equity and equity-related stocks of large, mid and small-cap companies. In addition, the minimum investment of each sector must be 25%.

No, there is no such lock-in period for multi-cap funds. You can redeem the return anytime. However, you must pay an exit load charge when selling the investment, which is different for different types of multi-cap funds.

You can visit the INDmoney website and create your account to start investing in mutual funds online. It is a digital process with no paperwork required, and you can choose the fund according to your preference. 

The following are the three types of multi-cap mutual funds:

• Concentrated on Large Cap Companies: It is a type of multi-cap mutual fund that primarily focuses on investing in stocks of large-cap companies, more than 25%.  After that, it seeks investment opportunities in small and mid-cap companies. 
• Concentrated on Mid/Small Companies: These multi-cap mutual funds seek good investment opportunities in mid and small-cap companies. It then looks for investment opportunities in large-cap companies to reduce the chances of risk.
• Funds with No Specific Focus: Apart from the minimum investment limit of 25% of the corpus in each market capitalisation, these mutual funds do not focus on any specific capitalisation. 

Multi-cap mutual funds are taxed in the following ways:

• Capital Gains Tax: If you sell the multi-cap mutual funds investment within 1 year of investing, you must pay a tax of 15%, known as short-term capital gains (STCG). In case you hold the investment for one year or more, the gains are called long-term capital gains (LTCG). If you earn returns up to Rs. 1 lakh in a financial year, it is tax-free and earning more is taxed at 10% of the exceeding amount. 
• Dividend Taxation: Dividends are added to the investor’s income and are taxed as per their applicable income tax slab.

Key Differences Between Multi Cap and Flexi Cap Mutual Funds are:

On the basis of Equity Exposure:

Multi-Cap Funds require a minimum of 75% in Equities where is Flexi Cap requires a minimum of 65% in Equities.

On the basis of Market Cap Allocation:
As per SEBI, Multi-Cap Funds are required to have a minimum 25% allocation of their portfolio in large-cap, mid-cap, and small-cap companies where as Flexi-Cap Funds are free to invest in any market cap because they have no mandate