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Risk-laden Flexibility

Without any cap or sector biases, multi-cap funds can turn out high on flexibility as well as risk

I am thinking of investing in multi cap funds through SIPs for the next four years. Please suggest the best funds that I can invest in.

We define multi cap funds as funds which have between 40 to 60 per cent of their assets in large-cap stock over the past three years. As a class of funds, multi-cap funds are meant to weather all kinds of market conditions and come up winners. As a category, multi-cap funds have the entire stock universe as their playground unlike their small-, mid- and large-cap siblings, multi-cap funds aren't limited to buying stocks of one size. Multi-cap fund managers are allowed to go anywhere across value or growth, across the spectrum of capitalization where they see returns within permitted risk levels.

With no market-cap bias, multi-cap funds are high on flexibility and risk and investors should be cautious of selecting funds in this category as a lot drives on the fund manager's ability to ride on a strategy. You can consider investing Reliance Equity Opportunities or HDFC Equity which are highly rated and have a proven track record and performance history.

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