The equity market has been trending higher, marking new highs and peaks. Mutual fund houses have attracted record inflows in the last six months and many fund houses have launched new open-ended funds on diversified themes such as arbitrage, income, balanced, and ETFs, tracking different key indices.

In this period, only two multi-cap funds were launched as this is an old theme that many fund houses have already leveraged on.

Multi-cap as a theme has consistently outperformed equity large-cap funds over the long term, as it allows the fund manager to juggle large, mid and small-cap stocks, depending on market conditions. Over the last one year, equity multi-cap funds have delivered 21 per cent gains that have beaten mid-cap funds’ returns of 20 per cent.

Axis Mutual Fund has announced the launch of Axis Multicap Fund, an open-ended equity scheme, that will invest in a diversified portfolio of stocks from across the market-cap spectrum.

Investment strategy The fund’s strategy is to look for stocks that are at inflection point. This would essentially entail companies with sustainable earnings growth, credible management, and possible market share gains on account of competitive advantage. Sectors such as global auto ancillaries, cement, telecom and airlines--where consolidation is on the cards-- also fall under the fund’s investment radar. Sunrise industries such as e-commerce, retailing and fin-tech could also find place in its portfolio. In effect, the fund seeks to invest across sectors and market capitalisation, following the bottom-up approach for stock-picking.

The fund is benchmarked against the S&P BSE 200 Index. Jinesh Gopani & Shreyash Devalkar are the fund managers. Axis Long Term Equity is a top performing fund in the ELSS category that is managed by Jinesh Gopani.

Peer performance Given the volatility in the market, the risk-return trade-off is likely to be favourable in a multi-cap strategy.

But there are already plenty of choices in this category with a good track record of consistent returns.

Aditya Birla Sun Life Equity, L&T India Value, Mirae Asset India Opportunities, ICICI Pru Value Discovery, and SBI Magnum Multicap are a few top performing funds, delivering 21-22 per cent return over a five-year period.

There have been laggards too--HDFC Premier Multi-cap, UTI Opportunities, Franklin India Opportunities, to name a few.

Hence, for investors with moderate risk appetite, existing funds with a good long-term track record may be a better bet. The performance of the new fund can be reviewed at a later date for investment.

The NFO opens on October 30, 2017 and closes on November 13, 2017.

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