Find the best multi-cap fund for 2020 along with the selection process and review the performance of the best multi-cap fund of 2019.
We will find the best multi-cap mutual fund to invest in 2020 and review the performance of our choice of best multi-cap fund of 2019.
A multi-cap fund is a mutual fund that can invest irrespective of the market cap of the companies. The advantage a multi-cap fund over a large-cap or mid-cap fund is – it doesn’t have a limitation to the amount of exposure it can take in a mid-cap company in the rising market or a restriction of a mid-cap fund to move to large-cap stocks in a falling market.
So it is a balancing act between the large-cap, mid-cap, and small-cap fund taking the best of both the world.
The multi-cap fund has an undue advantage, but it also means if the fund manager is on the wrong side of the call, it can underperform very heavily as well.
Still, when the decision to choose more allocation to mid-cap or large-cap is with the fund manager, it can be more beneficial to the investor as they are more equipped to make better decisions in the market.
Still, I think, it is better to do it yourself, check out:
Best Large Cap Funds To Invest in 2020, Best Midcap Fund to Invest in 2020, along with the Best Small Cap Fund to Invest in 2020.
The Top Multi-Cap Funds for 2020
The process we will use is- from the 4 and 5 star rated direct multi-cap funds by ValueResearchOnline, we will choose the funds that can outperform in 2020.
We selected only the funds with more than 5000Cr AUM or assets under management.
Now for all the funds, let’s make the table for allocation to Giant cap, large-cap, midcap, and small-cap.
| Fund / Allocation | Giant | Large | Mid | Small |
|---|---|---|---|---|
| Kotak Standard Multicap | 56 | 17 | 24 | 2 |
| Motilal Oswal Multicap 35 | 67 | 24 | 7 | 1 |
| ABSL Equity | 52 | 21 | 20 | 6 |
| Axis Focused 25 | 70 | 14 | 14 | 0 |
| SBI Magnum MultiCap | 53 | 15 | 22 | 7 |
| SBI Focused Equity | 46 | 13 | 33 | 7 |
*All data as per ValueResearchOnline as on 26Jan2020
Best Multi-cap Fund to Invest in 2020
From the above table, depending on your view for 2020, one should select the best multi-cap fund to invest in 2020.
There are two schools of thought, and let me share them first.
- As Indian GDP growth is on the slower side, the large-cap companies will do well and take the market cap from the midcap companies.
- As the Indian GDP growth recovers, the mid-cap segment of the market will do well in the future, whereas large-cap will consolidate.
Depending on what is your view, you should select the best multi-cap fund. I am of the view; the mid-cap segment will do well. So my best multi-cap fund is
Kotak Standard Multicap
Yes, I agree the best allocation of mid-caps is in the SBI Focused Equity fund, but then there are two SBI funds in the Multicap segment, which may consolidate going forward, and it may end up having 22% allocation in mid-caps.
So I will go with Kotak Standard Multicap Fund.
Axis Focused 25
For those who are of the view, large-cap will continue to outperform the best multi-cap fund for 2020 has to be Axis Focused 25.
How Well The Best Multi-Cap Fund of 2019 Performed?
The best multi-cap fund of 2019 was Mirae Asset India Equity Fund and Kotak Standard Multicap Fund.
Mirae Asset India Equity Fund has merged and possibly become the large-cap fund, and so there is no point comparing its performance. Large-cap has done well, and so the fund.
Kotak Standard Multicap Fund is even out the best multi-cap fund of 2020 as well, and it has given a return of 18% as compared to the Multi-Cap category return of 15% and S&P BSE 500 Index return of 12%.
The fund has outperformed the underlying index by a considerable margin.
Final Thoughts
Do not switch funds every year and pay the entry and exit load or long term capital gains tax.
In case you have not selected a better performing fund earlier or want to move to a new fund for any other reason (move to regular to direct funds). Don’t exit the investment in the old fund. Just stop the SIP and let the invested amount remain and grow over time in the past funds. Create a new SIP in the new funds.
As always, this isn’t an endorsement of any fund. The emphasis is on the process. The funds may be doing well now, but when you want to be investing, use the same process, and find the best fund at that time to invest. Use ValueResearchOnline and CRISIL as and when you want to invest in 2020.
Hi Shabbir, I am watching your website for long time and it was really helpful and informative. I am 34 year old and have asked your suggestion about the below 3 funds before 4.5 years and doing monthly SIP in below mutual funds for long term goal(15+ years)
1. HDFC Hybrid equity fund DG – 40%
2. HDFC Mid-cap Oppurtunities fund DG – 30%
3. ICICI Pru Bluechip fund DG – 30%
But, currently I am seeing these funds are not performing for last few years. So, I am planning to switch to the below funds based on my research(switch all the new SIP’s and keep the existing),
1. Axis Bluechip DG – 25%
2. Mirae Asset Emerging Bluechip DG – 25%
3. Kotak Standard Multicap Fund DG – 25%
4. L&T Midcap Fund DG – 12.5%
5. SBI Smallcap DG – 12.5%
Please advise on these funds.
This is not the right time to make a switch because it is time when every performance parameter of every fund will look bad. It is important that you apply the right approach to invest and then sit tight in this time. If possible do some extra topups to the funds. May be if you think the funds aren’t doing good, do a topup in some other funds using either my way of finding the best fund or any other approach.
Thanks Shabbir