SBI Mutual Fund closed its new fund offer (NFO) today for its Multicap Fund which is an open-ended equity scheme that would invest in stocks across the capitalisation spectrum — large cap, mid cap and small cap. The fund offer was open for two weeks starting February 14. The scheme promises to follow unconstrained, sector agnostic approach, and active stock management with bottom-up strategy.
While giving a rationale for choosing multi cap fund, the fund house asserts that the wealth has grown across segments. Between 2011 to 2021, the large cap stocks have posted 4.7 times growth, the mid cap stocks too reported 4.7 times growth whereas small cap stocks posted 7.5 times growth.
"Market capitalisation across large cap, midcap, and small cap have grown multifold indicating increased investor participation in the equity market thus signalling confidence to meet their long-term financial goals," says the AMC in a statement.
Also the fund will follow sector agnostic philosophy which is based on the idea that representation of sectors based on market cap may not be indicative of good business. For instance, financial services' weight is 33.3 percent in Nifty100, 15.8 percent in Nifty Midcap 150 and 17.1 percent in Nifty Small cap 250.
The asset management company (AMC) woos mutual fund investors with opportunities for long term growth in capital from a diversified portfolio of equity and equity related instruments across market capitalisation.
The benchmark index will be Nifty 500 Multicap 50:25:25 TRI Index. The minimum application will be ₹5,000 and in multiples of Re 1 thereafter. The minimum monthly SIP is of ₹500 and in multiples of Re 1.
The AMC invites long term investors aiming to build wealth to meet their long-term financial goas with a better risk return trade off. The fund house also states that the scheme is meant for investors having multiple investments across market capitalisation, looking for consolidation through a single solution.
The scheme should appeal to investors who are looking for long term wealth creation (more than 5 years) or who want to have an unbiased flavour of market caps.
SBI mutual fund projects the scheme as a one stop solution offering diversification across market cap unlike holding on to individual stocks.
There will be an exit load calculated at one percent of the applicable NAV if investors redeem or switch out the units (bought or switched from another scheme of the fund) in excess of the limit on or before the expiry of one year from the allotment date.