Multi cap funds are diversified equity mutual funds which invest across various market cap segments i.e. large cap, midcap and small cap stocks. Multi cap mutual fund schemes are one the most diversified among all equity fund categories as they are not only diversified across industries and sectors, but also across the various market cap segments.
As per SEBI classification, the largest 100 publicly listed companies in India by full market capitalization are classified as large cap companies, 101st to 250th publicly listed companies in India by full market capitalization are midcap companies and 251st onward publicly listed companies in India by full market capitalization are classified as small cap companies.
As per SEBI guideline, a Multi cap fund is required to invest at least 75% of its total assets in equity and equity related instruments at any point in time. And also, the portfolio must allocate at least 25% each in large cap, mid cap and small cap stocks, out of the total assets and 10% in Units issued by REITs and InvITs.
A Multi cap fund can provide diversification by investing across all these 3 market segments.
Source: National Stock Exchange, Advisorkhoj Research as on May 31,2023. Large cap segment is represented by Nifty 100 TRI, midcap by Nifty Midcap 150 TRI and small cap by Nifty Small Cap 250 TRI. Disclaimer: Past performance may or may not be sustained in the future
|Market Segment||Market Benchmark||Last 3 years*||Last 5 years*||Last 10 years*|
|Large Cap||Nifty 100 TRI||22.69%||12.29%||14.27%|
|Midcap||Nifty Midcap 150 TRI||34.06%||16.08%||20.27%|
|Small Cap||Nifty Small Cap 250 TRI||37.74%||12.98%||18.46%|
Taxation of Multi cap funds
Capital gain tax is applicable when you redeem the units and make profits. The rate of capital gain tax varies on the period for which the units were held before redemption.
Short term capital gains – Tax rate is 15% if the holding period is less than 12 months.
Long term capital gains - If the holding period is more than 12 months, then long term capital gains tax applies. Long term capital gains up to Rs 1 Lakh in a financial year is tax free, and thereafter, the tax rate is 10% without indexation.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.