Sebi’s announcement of the new norms mandating multi cap funds to invest at least 25% each in large cap, mid cap and small cap stocks is expected to bring fresh buying worth ₹25,000 crore and ₹10,000 crore in small caps and mid cap stocks respectively, Most multi cap funds have around 70-80% in large cap stocks and 10-20% in mid cap stocks and 5-10% allocation in small caps as seen below.

Top – 5 Multi Cap Funds by AUM ( as on 31st Aug ) AUM (Rs.Cr.) Large Cap Mid Cap Small Cap 
Kotak Standard Multicap Fund 29,714.07 66.47% 22.50% 1.53%
HDFC Equity Fund 19,797.98 83.16% 8.38% 3.93%
Motilal Oswal Multicap 35 Fund     11,239.87 71.95% 10.07% 4.66%
Aditya Birla Sun Life Growth Multi Cap Fund 11,023.35 55.91% 23.95% 6.49%
UTI Equity Fund 10,982.95 47.49% 32.17% 8.16%

 

Kotak Standard Multicap Fund – Growth Multi Cap Fund
Top Large Cap Holding Holding Top Small Cap Holding Holding
Reliance Industries Ltd. 9.95% BEML Ltd 0.21
Infosys Ltd. 5.78% Arvind Fashions Ltd. 0.05
ICICI Bank Ltd. 5.78% Arvind Ltd 0.03
HDFC Bank Ltd. 5.49%
TCS 4.94%
HDFC Equity Fund – Growth Multi Cap Fund
Top Large Cap Holding             Holding Top Small Cap Holding Holding
ICICI Bank Ltd. 9.35% Bharat Dynamics 0.93
State Bank Of India 8.31% Kalpataru Power 0.91
Infosys Ltd. 7.45% BEML Ltd 0.62
Larsen & Toubro Ltd. 6.89% Praj Industries 0.51
ITC Limited 5.45% CG Power & Indu. 0.39
Motilal Oswal Multicap 35 Fund – Growth Multi Cap Fund
Top Large Cap Holding             Holding Top Small Cap Holding Holding
Reliance Industries Ltd. 9.44% Vaibhav Global 4.66%
HDFC Life Insurance 7.57%
HDFC Bank Ltd. 7.25%
Maruti Suzuki 5.48%
Infosys Ltd. 4.96%
Aditya Birla Sun Life Growth Multi Cap Fund
Top Large Cap Holding             Holding Top Small Cap Holding Holding
HDFC Bank Ltd. 8.66% Strides Pharma 1.65%
ICICI Bank Ltd. 8.07% Radico Khaitan 1.07%
Bharti Airtel Ltd. 5.78% Dishman Carbogen 0.43%
Infosys Ltd. 5.38% Dish TV India 0.30%
 Dr. Reddy 5.07% Century Textiles 0.83%

Source: Moneycontrol, Elite Wealth Research

To adhere to the new rules, multi-cap funds will have to significantly increase their exposure to small-cap stocks to bring it to a minimum of 25% allocation. The increase required in mid cap stocks are not that dramatic as in the case of the small cap segment.

Option Available to Mutual Funds

  • Return money to clients.

  • Switching to other equity funds.

  • Merge multi-cap fund with large cap funds or large and mid-cap funds to maintain the same investment process and portfolio quality.

Convert the multi-cap fund to a thematic fund like ESG (environmental, social and governance) fund to maintain investment process as well as portfolio quality.

Option-Available-to-Mutual-Funds

Our Small Cap Picks

Company Market Cap Share Hold (%) Q1FY21  
(In Rs. Cr.)      For Inst Prom OPM ROE (%)
Alkyl Amines 6494.75 1.9 2.21 74.19 32.05 43.97
Avanti Feeds 6427.28 33.93 2.98 43.69 16.4 29.6
Balrampur Chini 3091.20 20.62 10.03 41.21 15.85 22.91
ERIS Lifescience 6633.83 10.28 11.33 55.55 36.59 28.94
Fairchem Specialty 2177.20 0.16 1.01 74.06 17.34 17.71
FDC 5578.02 6.39 5.11 69.24 42.69 16.03
Galaxy Surfactants 6323.75 5.26 13.59 70.93 15.01 23.7
Heidelberg Cement 4089.18 10.23 8 69.39 29.07 21.57
Huhtamaki PPL 2048.32 4.5 1.61 66.94 10.76 27.12
Kaveri Seed Co. 3164.75 20.84 10.77 55.52 43.15 22.51
Marksans Pharma 1868.45 5.16 0.68 48.25 21.2 20.49
Meghmani Organ. 1930.14 9.61 0.16 48.7 23.24 21.1
Radico Khaitan 5262.54 20.01 15.43 40.31 18.98 15.81
Sheela Foam 6837.25 3 20.15 75 2.42 23.55
Ratnamani Metals 5294.44 10.18 13.79 60.16 10.64 19.03
Balaji Amines 2716.58 3.17 0.36 53.7 10.17 15.82
Astec Lifescience 2243.48 2.02 0.3 72.3 8.27 21.17
DCM Shriram 5365.46 12.89 9.62 66.53 4.43 18.99

Source: Capitaline, Elite Wealth Research

DISCLOSURE IN PURSUANCE OF SECTION 19 OF SEBI (RA) REGULATION 2014

Elite Wealth Advisors Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Advisors Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as read more


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