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Playing The Field

Multi-cap funds have no constraints when it comes to picking stocks based on market capitalisation…

I would like to know what are multi-cap funds. I have invested Rs15,000 in Reliance Regular Savings Equity in June 2010, should I stay invested?
- Abhilash Thuluvath

As a category, multi-cap funds have the entire stock universe as their playground because these are not limited by picking stocks by market-capitalisation constraints such as small-, mid- and large-cap. Value Research classifies multi-cap funds as those which have between 40 to 60 per cent of their assets in large-cap companies over the last three years. Fund managers of multi-cap funds are allowed to go anywhere across value or growth, across the spectrum of capitalization where they see returns within permitted risk levels.

Reliance Regular Savings Equity is a multi-cap fund which is performing well in the category and you can remain invested in it. However, it would be wise to invest regularly in equity mutual funds to get the most of long-term growth along with the power of compounding over a lump sum investment. Do review the performance of your fund holdings at least once a year to check its progress, this way if a fund is consistently lagging in performance there is scope for course correction.

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