Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now


You can switch off notifications anytime using browser settings.

Analysis

Portfolio

Loading...
Select Portfolio and Asset Combination for Display on Market Band
Select Portfolio
Select Asset Class
Show More
Download ET MARKETS APP

Get ET Markets in your own language

DOWNLOAD THE APP NOW

+91

CHOOSE LANGUAGE

ENG

  • ENG - English
  • HIN - हिन्दी
  • GUJ - ગુજરાતી
  • MAR - मराठी
  • BEN - বাংলা
  • KAN - ಕನ್ನಡ
  • ORI - ଓଡିଆ
  • TEL - తెలుగు
  • TAM - தமிழ்
Drag according to your convenience
ET NOW RADIO
ET NOW
TIMES NOW

Best multicap mutual funds to invest in 2018

ET Online|
Updated: Sep 12, 2018, 10.45 AM IST
0Comments
returns-8-thinkstock
After a gap of a few months, we are here with our updated list of recommended multicap equity mutual fund schemes. We couldn't update the list in the last few months because of the re-categorisaiton exercise carried our by the mutual fund houses at the behest of Sebi. Now that the process is over, we are back with our recommendation list.

There are some changes in the list. Only two multicap schemes -- Motilal Oswal Multicap Scheme and SBI Magnum Multicap Scheme - from the old list found a place in the new list. Others such as Aditya Birla Sun Life Advantage Fund, DSP BlackRock Opportunities Fund were out of the list because they are no more categorised as multicap schemes. Both the schemes have been re-categorised as large and midcap schemes.

We have added three new multicap mutual fund schemes to our list. They are:
Mirae Asset India Equity Fund
Parag Parikh Long Term Equity Fund
Kotak Standard Multicap Scheme.

Most mutual fund advisors believe that regular investors need not look beyond multicap mutual fund schemes or diversified equity schemes to invest in equities or stocks to achieve their long-term financial goals. Also, if you have a moderate schemes, you should invest predominantly in multicap schemes.

Multicap schemes invest across market capitalisations and sectors. That means the fund manager has the freedom to switch to sectors and stocks belonging to any capitalisation based on his views or their performances. So, if you are planning to invest in just one equity mutual fund schemes to meet your long-term goals, bet on a multicap scheme.

Simply put, these schemes offer the fund manager the freedom to invest across largecap, midcap and smallcap stocks or any sectors that he believes are going to benefit in the coming days. This means the investor need not worry about where the action is going to be or chasing the action or worry about missing out on rallies in some pockets of the market. Chances are that the multicap fund may have a meaningful exposure to the segment already.

A multicap mutual fund scheme is meant for investors with a moderate risk appetite. Since the scheme also invests in mid or smallcap stocks, it is riskier than largecap schemes that invest predominantly in very large companies. However, because of the exposure to mid and smallcap stocks, multicap schemes are comparatively riskier and can also offer higher returns.

If you want to invest in a multicap scheme, but not sure how to pick a scheme, here is some help. We have handpicked some schemes for you. Invest in these schemes with an investment horizon of five to seven years to achieve your long-term financial goals like your retirement and child's higher education.

multicap

If you want to know about our methodology, here is it:
ET.com Mutual Funds has employed the following parameters for shortlisting the mutual fund schemes.
1. Mean rolling returns : rolled daily for the last three years.
2. Consistency in the last three years : The three-year period is divided into smaller time periods each with a progressing weighting.
3. Downside risk : We have considered only the negative returns given by the mutual fund scheme for this.
X =Returns below zero
Y = Sum of all squares of X
Z = Y/number of days taken for computing the ratio
Downside risk = Square root of Z
4. Outperformance: It is measured by Jensen's Alpha for the last three years. Jensen's Alpha shows the risk-adjusted return generated by a mutual fund scheme relative to the expected market return predicted by the Capital Asset Pricing Model (CAPM). Higher Alpha indicates that the portfolio performance has outstripped the returns predicted by the market.

Average returns generated by the MF Scheme - [Risk Free Rate + Beta of the MF Scheme * {(Average return of the index - Risk Free Rate}
5. Asset size: For equity diversified funds, the threshold asset size is Rs 100 crore, and Rs 50 crore for balanced funds.

We have also conducted a back testing of our model portfolios. These returns are forward returns from the base date.

(Disclaimer: past performance is no guarantee for future performance.)

0Comments

Also Read

How to redeem mutual fund

DSP BlackRock Mutual Fund becomes DSP Mutual Fund

DSP BlackRock Mutual Fund becomes DSP Mutual Fund

How to redeem your mutual funds

How to redeem your mutual funds

Comments
Add Your Comments
Commenting feature is disabled in your country/region.

Loading
Please wait...