HDFC Asset Management Company has announced the launch of New Fund Offer (NFO) of HDFC Multi Cap Fund. The NFO is currently open and will close on December 7, 2021. The fund is aimed at investors looking to diversify their portfolio with a disciplined exposure to large cap, mid cap, and small cap segments. The Scheme will make mandatory allocation of minimum 25% of its total assets each in large, mid, and small cap companies, while the balance 25% of its total assets will be allocated based on market view of the fund manager.
Why diversification matters
Historically, different Market cap segments have outperformed each other at different points in time.
Out of the last 16 Financial years (FY06 to FY21), Large caps have been the top performing market cap segment in 6 years, Mid Caps in 3 years and Small Caps in 7 years. Consequently, this presents a strong case for diversification across market cap segments.
However, deciding the allocation to Large, Mid and Small Caps is not easy for most investors and hence investing in a multi-cap fund helps.
Why to choose Multi-Cap Funds
Multi Cap Funds provides a one stop solution for investors looking to diversify their portfolio across market cap segments with an aim to get the stability of Large Caps, growth of Mid Caps and potential of Small Caps through one Fund. Multi Cap approach helps investors focus on diversification instead of predicting outperformance or underperformance of different market cap segments.
In terms of investment strategy, HDFC Multi Cap Fund will follow a mix of top down and bottom up approach to stock selection. As per the current investment strategy, the Scheme will invest about 60%-75% of Total Assets in Large and Mid Caps. Further, it will invest about 25%-40% of Total Assets in Small Caps. The Scheme will invest without a style bias and aims to capture opportunities across growth, value and turnaround companies.
Whom it suits
The Scheme will have a choice of wide representation of sectors across market capitalization and thus suits an investor who wishes to invest in a diversified equity fund. HDFC Multi Cap Fund is suitable for investors with a medium to long term investment horizon, looking for disciplined exposure to Large, Mid and Small Caps.