NFO review: Axis Multicap Fund NFO; should you invest?

Staff Writer   /   December 7, 2021

Axis MF has launched the new fund offer of Axis Multicap Fund. This is a multicap scheme which means it will invest at least 25% each in largecap, midcap and smallcap stocks. There are already 12 products here in this bucket and Axis AMC and HDFC AMC are the latest ones to launch a fresh scheme.

Multicap mandate

As per SEBI, large cap stocks are defined as top 100 companies by market capitalization in India, mid cap stocks can be defined as the 101 to 250th companies by market capitalization, while small cap stocks can be defined as the 251st and lower companies by market capitalization.

Previously, multicap equity mutual funds were those that invested across large, mid and smallcap stocks but they had a free hand. That is there was no minimum investment mandate for the 3 cap buckets. That mandate has been revised now. Today, multicap funds are those that invest atleast 25% per cent in largecaps, atleast 25% in midcaps and atleast 25% in smallcaps. Now, only 25% fund allocation can be used freely i.e. flexible portfolio part.

Axis Multicap Fund aims to harness exposure to entire market spectrum, offer portfolio diversification and provide access to quality stocks in 1 compact basket. Besides, the multicap nature means investors will get the power of 3-in-1 (all market caps with single fund), balanced allocation i.e. mix of large, mid and small caps offers stability & growth potential while managing risk. Axis MF is also renowned for focus on ‘quality’ stocks i.e it aeeks to invest in current & future leaders, regardless of size.

Typically, multicap funds allocate about 40-42% in largecaps, 25-26% in midcaps and 25% in smallcaps. The rest is usually kept as cash. So, it will be interesting to see what approach Axis Multicap NFO takes.

Why multicap

Multicap funds are a bet to avoid missing out on market rallies. One must understand different segments outperform each other at different times. One can diversify across market cap segments and multicap funds offer a good vehicle to diversify. Since market moves in phases, it is important to be in the right segment at the right time, instead of choosing largecaps over midcaps and smallcaps as many investors often do.

Multicap funds offer a better risk profile, as they are somewhere between largecap funds and midcap funds. This is because largecap funds invest minimum 80% in largecaps. Midcap funds invest minimum 65% in midcaps. Due to these constrained mandates, a multicap fund offers a better risk-reward matrix and can often take an optimal middle path.

Multicap funds also provide controlled exposure and that helps reduce volatility of portfolio. This is an important thing to note amid current volatile markets.

HDFC Multicap NFO details

Fund manager – Sachin Jain and Anupam Tiwari

Product suitability – Axis Multicap Fund will be suitable for investors seeking long-term wealth creation and those who have a high risk appetite.

Minimum NFO amount – One can invest a minimum of Rs. 5,000 and in multiples of Rs. 1 thereafter in the NFO.

Investment modes – Axis MF Online / Axis MF Mobile, MF Utility, Channel Distributors, Stock Exchange Platforms
and Other Electronic Mode

Exit load – If redeemed / switched-out within 12 months from the date of allotment: For 10% of investment: Nil and For remaining investment: 1%. If redeemed/switched out after 12 months from the date of allotment: Nil

Exit load – If redeemed/switched out within 1 year from the date of allotment, exit load is 1%. If redeemed after 1 year from the date of allotment, no load.

Investors must keep in mind that for equity funds the AMC’s track record is important. In this case, Axis AMC has a stellar record of managing equity funds for more than 2 decades. This provides an added comfort. Instead of lumpsum allocation, investors should consider SIP investments to achieve market cap based diversified allocation.

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