Are Multi Cap Funds The Right Fit For Your Portfolio?: All You Need To Know | The Mutual Fund Show

Summary

In this episode of the Mutual Fund Show on NDTV Profit, host Alex Matthew discusses the launch of a new multicap fund by PGM India with Chief Investment Officer V. Paharia. The fund, targeting a diversified investment across large, mid, and small-cap companies, aims to balance risk and reward. The conversation explores the fund's strategy, the importance of a long-term investment horizon, and the current market conditions. Expert guests Arnav Panda and Vishal D'avan join to share insights on multicap funds' performance, risk management, and how investors should approach portfolio diversification.

Takeaways

• 😀 The discussion revolves around the launch of a new multicap fund by PGM India, highlighting its investment in all market capitalizations.
• 💼 V Paharia, Chief Investment Officer at PGM India, explains that multicap funds are required to invest at least 25% in each market capitalization segment, providing a balanced risk-reward profile.
• 📈 Multicap funds have seen significant performance in recent years, contrary to the underperformance of high growth, high quality companies.
• 🌐 The investing universe for the new fund is broad, with over 1200 companies having a market cap of more than 1000 crores, focusing on high growth and high quality companies.
• 🔢 The portfolio size for the new fund is expected to be between 60 to 75 stocks, with a more refined universe of 160 to 200 stocks.
• 💹 The fund's strategy emphasizes 'growth at a reasonable price', which has underperformed recently, suggesting potential for future outperformance.
• 📉 Despite the bull market, there is an acknowledgment of the inevitability of market drawdowns and the importance of a long-term investment horizon.
• 🏦 The conversation touches on the ideal allocation for multicap funds within an investor's portfolio, suggesting a disciplined approach with a long-term view.
• 💼 Expert opinions from Arnav Panda and Vishal Davan are included, discussing the performance of multicap funds and strategies for investors.
• 🏠 The show addresses specific investor queries about SIP investments for goals like buying a house, education, and early retirement, emphasizing the need for a balanced and diversified portfolio.

Q & A

What is the primary focus of the mutual fund show on NDTV Profit?

The mutual fund show on NDTV Profit focuses on providing actionable insights on everything related to mutual funds, particularly discussing new funds, strategies, and investment philosophies.

Why did PGM India Mutual Fund choose to launch a multicap fund at this time?

PGM India Mutual Fund launched a multicap fund to offer investors a blend of all three capitalizations (large cap, mid cap, and small cap), which can result in a good balance of potential risks and rewards.

What is the minimum requirement for investment in each category for a multicap fund?

A multicap fund has a base minimum requirement of investing at least 25% in each of the categories: large cap, mid cap, and small cap.

How does the investment philosophy of PGM India's new multicap fund differ from other multicap funds?

PGM India's new multicap fund follows an investment philosophy of predominantly investing in high growth and high-quality companies, which sets it apart from other multicap funds.

What is the likely size of the portfolio for PGM India's new multicap fund?

The portfolio size for PGM India's new multicap fund is expected to vary between 60 to 75 stocks, depending on the fund manager's ability and market view.

What is the 'Growth at a Reasonable Price' strategy, and how does it apply to the new multicap fund?

The 'Growth at a Reasonable Price' strategy involves investing in companies that are high growth and high quality but are not priced at a significant premium. This strategy is applied to the new multicap fund to seek companies that have underperformed recently but have strong underlying value.

How does the multicap fund strategy protect against market downturns?

While there is no hiding place from market downturns in equity investing, the multicap fund strategy aims to diversify across high growth and low growth segments, which can help in managing risk and potentially protecting against widespread downturns.

What is the ideal holding period for an investor in a multicap fund like the one discussed?

The ideal holding period for an investor in a multicap fund is considered to be long-term, with a suggestion of at least a three-year period, and possibly extending to 7 to 10 years for better risk management.

Why have some fund managers been forced to invest half of their assets into midcap and small cap stocks?

Some fund managers have been forced to invest half of their assets into midcap and small cap stocks due to the category rules that aim to provide diversification and exposure to different segments of the market, which can lead to outperformance.

How can investors choose the appropriate multicap fund for their portfolio?

Investors can choose the appropriate multicap fund by considering the fund's ability to manage downside risk, its historical performance, and its alignment with the investor's overall portfolio composition and risk tolerance.