Bajaj Finserv Launches Multi Cap Fund, NFO Opens Today

Bajaj Finserv Mutual Fund on February 6, 2025 launched a multi-cap fund. The Bajaj Finserv Multi Cap Fund is an open-ended equity scheme that will invest in equity and equity-related schemes of large-, mid- and small-cap companies with the aim of generating long-term capital appreciation.

NFO Details

The new fund offer (NFO) will remain open till February 20, 2025. The minimum subscription amount is Rs 500 and in multiples of Re 1 thereafter in the lump sum mode. For systematic investment plan (SIP), the minimum investment amount is Rs 500 and above for a minimum of six instalments. The NFO price is Rs 10 per unit.

The benchmark will be the Nifty 500 Multicap 50:25:25 TRI, Bajaj Finserv Mutual Fund said in its scheme information document (SID).

There is no entry load. However, an exit load will apply if units are redeemed and/or switched within six months of the allotment date as follows. There will be nil exit load up to 10 per cent of the units held and 1 per cent of the applicable net asset value (NAV) on the remaining 90 per cent of the units held.

The minimum additional purchase amount is Rs 100 and in multiples of Re 1.

What Are Multi-Cap Funds

Multi-cap funds are a type of equity mutual funds that invest in stocks across market capitalisation. Multi cap funds, according to the definition by the Securities and Exchanges Board of India (Sebi), should allocate a minimum of 25 per cent each in large-, mid-, and small-cap category.

This minimum allocation reduces the fund manager’s discretion. This type of fund can go overweight in any category as long as the minimum allocation of 25 per cent is maintained. They can also invest in debt and money market instruments. Additionally, they can invest up to 10 per cent in real estate investment trusts (REITs) and infrastructure investment trusts (InvITs).

The minimum and maximum allocation criteria across categories in multi-cap funds helps maintain even participation, providing diversification across large-, mid-, and small-cap stocks. This balanced approach offers a dynamic option for investors, effectively managing both risk and reward. This helps in optimising returns and navigating market fluctuations effectively.

While multi-cap funds reduce the fund manager’s restrictions and human judgemental errors, the specific allocation restrictions across market caps may impact their capacity to create alpha. Relying heavily on mid-cap and small-cap stocks for growth could pose risks, as these segments are considered riskier compared to large-caps.

Overall, multi-cap funds provide investors with the flexibility to invest across large-, mid-, and small-cap stocks, but careful consideration of individual risk profiles is essential before making investment decisions.