Career Search

Friday, September 26, 2014

Multicap MFs

Multicap MFs

 

 





Many newcomers to the stock market are a bit confused as investment experts are asking them to park money in multi-cap mutual fund schemes rather than advocating the traditional combination of large-cap plus small and mid-cap schemes.

Experts say that they are recommending multi-cap schemes as most investors fail to review their mutual fund holdings regularly and take timely actions. It is better to leave the task to a well-informed fund manager, they say.

Advisors typically ask investors to go for multi-cap after huge gains in small and midcap segments. They believe that investors won't be able to take a call on these sectors and a fund manager will be in a better position to judge whether to increase or cut down exposure to these segments.

However, a proper approach would be to consider the investment corpus and the risk profile of the investor before suggesting a scheme.

I think most investors are not very good at deciding what should be their exposure to large-cap schemes or small and mid-cap schemes. Most of them also don't know when to rebalance their portfolio. In such cases a multi-cap scheme would be ideal as a fund manager would take the decision of getting in and out of sec tors. It also helps to reduce tax burden as you don't have to incur short-term capital gains otherwise you would pay for rebalancing your holdings by selling a scheme before a year.

For example, an investor decides to invest 70% of the corpus in a large-cap scheme and the remaining in small and mid-cap schemes. If the mid and small-cap scheme has gained quite a bit (as it has happened in the last year), an investor should ideally book profit and reallocate the money to the large-cap scheme so that his portfolio allocation is maintained.

However, most investors fail to rebalance their portfolio, say investment advisors.

The different nomenclatures in the mutual fund space can be a bit misleading. There are large-cap schemes, large-cap schemes with mid-cap exposure, multi cap schemes, small and midcap schemes... it can be very confusing for a new investor, especially if the person is not familiar with the market. Clearly, there are midcap schemes and very few large-cap schemes, but the majority of the schemes are diversified schemes. One should focus on the investor to get the allocation right.

For example, if the new investor has a small corpus or intends to start a systematic investment plan (SIP) of 1,000 or 2,000, the person would be better off in a diversified fund.

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

Leave a missed Call on 94 8300 8300

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

Best Performing Mutual Funds

    1. Largecap Funds Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds Invest Online

      1. DSP BlackRock MicroCap Fund
      2. Franklin India Smaller Companies

E. Sector Funds Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

No comments: