scorecardresearchMagic of compounding: These multi cap funds gave 11% CAGR returns in the

Magic of compounding: These multi cap funds gave 11% CAGR returns in the past 5 years. Should you also invest?

Updated: 27 Mar 2023, 09:21 AM IST
TL;DR.

In multi-cap mutual funds, fund managers must invest a minimum of 25% in each of small cap, mid cap and large cap stocks unlike flexi-cap schemes where fund managers can choose any ratio of market segments.

Multi cap funds are mutual funds that invest in stocks across market capitalisation i.e., small cap, medium cap, and large caps

Multi cap funds are mutual funds that invest in stocks across market capitalisation i.e., small cap, medium cap, and large caps

A mutual fund scheme’s worth can be gauged through an interplay of several factors which include the category it belongs to, past record of fund house, and most important of all — the compound annual growth rate (CAGR) returns which the scheme has given over a period of time.

Although each factor has its own significance, the returns delivered by these schemes are considered important by investors before they zero in on a mutual fund scheme.

Here we list out the multi cap funds that have delivered more than 11 percent returns in the past five years, but we before proceeding further, will take a few moments to describe what exactly are multi cap funds.

What are multi cap funds?

Multi cap funds are mutual funds that invest in stocks across market capitalisation i.e., small cap, medium cap, and large cap. In multi-cap funds, fund managers are meant to invest a minimum of 25 percent in each of these categories i.e., small cap, mid cap and large cap.

In multi-cap mutual funds, fund managers must invest a minimum of 25 percent in each of these i.e., small cap, mid cap and large cap unlike flexi-cap schemes where fund managers can choose any ratio of market segments.

Multi cap funds                                     5-year-returns AUM ( crore)
Quant Active Fund                                                      18.32%3,595.64
Mahindra Manulife Multi Cap Fund                            13.24%1,538.20
Nippon India Multi Cap Fund                              11.75%13,988.18

(Source: AMFI; regular returns as on March 15, 2023)

We can see in the table above, Quant Active Fund gave a return of 18.32 percent in the past five years, Mahindra Manulife Multi Cap Fund delivered a return of 13.24 percent whereas Nippon India Multi Cap Fund gave a return of 11.75 percent.

Out of these three top performing fund schemes, the most popular scheme is Nippon India Multi Cap Fund with a huge assets under management (AUM) of 13,988 crore.

Here, we share more details on these three funds:

Quant Active Fund: This scheme was launched on April 17, 2001. It has given a return of 18.53 percent CAGR since inception. This means if someone had invested 10,000 at the time of scheme's launch, it would have grown to 4,11,562.

The key constituent stocks are ITC, HDFC Bank, RIL, SBI and IRB Infra.

Mahindra Manulife Multi Cap Fund: The scheme was launched on May 11, 2017. It has given a CAGR return of 12.53 percent since inception. This means if someone had invested 10,000 at the time of inception, it would have grown to 19,847 by now.

The top holdings of the scheme are ICICI Bank, Infosys, SBI, IndusInd Bank and Ambuja Cements.

Nippon India Multi Cap Fund: This scheme was launched on March 28, 2005. It has delivered a return of 16.80 percent since inception.

This means if someone has invested 10,000 at that time, it would have grown to 1,62,008.

The top five constituent stocks are Linde India, HDFC Bank, ICICI Bank, L&T and Axis Bank.

(Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment related decision.)

 

Article
Magic of compounding in mutual funds explained
First Published: 27 Mar 2023, 09:21 AM IST