3 Top Ranked Multi Cap Funds By CRISIL To Start SIP Now

As per the latest AMFI data for December month, multicap funds have seen the highest net inflow to the tune of Rs. 10,500 crore partially because of the 3 NFOs released in the category that raked in a cumulative sum of a huge Rs. 9509 crore. Further, outperformance of the category due to the mandatory higher allocation to small cap stocks which in the last 1-year has given higher returns is also spurring its offtake.

All About Multicap funds:

Fund houses were not coming up with true to label multicap funds and hence in order to diversify the underlying investments of multicap funds across the large, mid and small caps, SEBI via its circular dated September 11, 2020 mandated all AMCs to invest the corpus collected in the fund such that minimum 25% investment is put across each of the large cap, mid cap and small cap categories.

Multicap funds- Suitable for whom?

Ideally as the mandate holds 25% allocation to small caps which is highly risky, investment in multi-cap funds should be considered by high risk profile investors who have a longer investment horizon of over 5 years such that the strategy can bear decent returns.

Top CRISIL ranked Multi cap funds with their return performance

CRISIL- the rating agency for various financial instruments also ranks mutual funds. The company site mentions that the CRISIL Mutual Fund Ranking or CFMR is done employing global best practices. An S&P Global Company-CRISIL ventured into the space in 2000 and since then is widely recognised among various stakeholders including AMCs, investors and intermediaries.

Further CFMR takes into consideration a host of factors including NAV and portfolio based attributes for evaluation and hence arriving at the final ranking for the fund. The various attributes factored in are asset concentration, asset quality, liquidity and risk-adjusted returns. CRISIL rank for mutual fund is accorded on a scale of 1 to 5, wherein CRISIL Rank 1 indicates 'very good performance'. In any category, the top 10 percentile of funds are ranked as CRISIL Fund Rank 1 and the next 20 percentile as CRISIL Fund Rank 2.

 

Multicap funds	Rank	1-year SIP annualised return	3-year SIP annualised return	5-year SIP annualised return
Quant Active Fund-Growth	Rank 1 or 5 Star Rating	46.81%	50.18%	33.02%
Mahindra Manulife Multicap Badhat Yojana	Rank 2 or 4 Star rating	46.50%	40.30%	NA
Baroda Multicap fund	Rank 2 or 4 Star rating	46.18%	37.63%	23.55%

Will multicap funds outperform going ahead?

As per Value Research data, multi cap mutual funds offered an average return of 40.72% in the past one year in comparison to 30.57% average returns that were delivered by the flexi cap category, but past performance is in no way an indication of future performance. The category delivered better performance owing to the bull run we were in during which mid and small-cap stocks tend to perform better in comparison to large-caps. Now if the bullish momentum slows down as is the case currently small and mid cap segments can see higher volatility together with liquidity issues. Nevertheless, the allocation to large caps shall lend stability while offsetting some degree of volatility.

Disclaimer:

Investing in mutual funds is risky and investors need to be cautious. Neither Greynium Information Technologies nor the author would be responsible for any losses incurred based on decisions made from the article. Investors are also advised caution as the markets have closed at an historic high.