Aditya Birla Sun Life Multi-Cap Fund NFO – Review

Aditya Birla Sun Life Multi-Cap Fund NFO – ReviewAditya Birla Sun Life Multi-Cap Fund NFO – Review


ABSL Mutual Funds has launched a new fund offer, Aditya Birla Sun Life Multi-Cap Fund that would open for subscription on 19th April, 2021. It’s an open-ended fund that invests in large caps, mid-caps, and small caps. This is the first new fund multicap after SEBI has changed the guidelines that Multicap funds should invest 25% each in largecap, midcap and smallcap stocks. Should you be invest in Aditya Birla Sun Life Multi-Cap NFO?

Also Read: Why should you invest in Mirae Asset Fang+ Fund which invests in Facebook, Twitter, Google and Netflix?

Aditya Birla Sun Life Multi-Cap Fund NFO Details

Aditya Birla Sun Life Multi-Cap Fund would open for subscription on Monday, 19th April, 2021 and closes on Monday, 3rd May, 2021. This is an open-ended mutual fund scheme. Here are the NFO issue details.

Scheme Opens 19-Apr-21
Scheme Closes 03-May-21
Scheme reopens for continuous purchase/sale Within 5 business days from the date of allotment
Minimum Lumpsum Rs 500
Minimum SIP Rs 500  for 6 months
NAV of the fund Rs 10 during NFO period
Entry Load Nil
Exit Load < 1 year – 1%
> 1 year – Nil
Risk Very High
Max expense Ratio (TER) 2.25%
Benchmark Nifty 500 Multicap 50:25:25 TRI

Aditya Birla Sun Life Multi-Cap Fund SID

What is the investment objective of Aditya Birla Sun Life Multi-Cap Fund NFO?

The objective of the scheme is to achieve long term growth of capital, at commensurate levels of risk through a diversified research based investment in Large, Mid & Small cap companies.

However, there can be no assurance or guarantee that the investment objective of the scheme would be achieved.

What is the allocation pattern in this mutual fund scheme?

This fund investment pattern is as follows:

Type of instruments Min % Max % Risk Profile
Equity & Equity related instruments across large, mid and small cap companies (25% each) 80% 100% High
Debt and Money Market Instruments 0% 20% Low to Medium

Why to invest in the Aditya Birla Sun Life Multi-Cap Fund NFO?

Here are a few reasons to invest in this fund.

1) This fund would invest a minimum of 25% each in large cap, Midcap and smallcap which can help investors for diversification.

2) While investment in large cap would provide stability, investment in Midcap and smallcap funds would provide opportunity to invest in multibagger stocks that can generate high returns.

Major risk factors you should consider before investing in such funds

One should consider some of these risk factors / negative factors before investing.

1) This fund would invest a minimum of 25% each in large cap, Midcap and smallcap stocks. This kind of portfolio allocation is relatively new and we do not know how such allocation would perform in medium to long term.

2) This scheme would invest in smallcap and Midcap stocks. While such stocks can provide high returns in the long term, these are high risk.

3) This mutual fund would invest up to 50% in derivatives, which is high risk.

4) It invests in fixed income options  where there is interest rate risk, price risk, credit risk, liquidity risk and pre-payment risk.

5) This mutual fund would invest up to 20% in foreign assets. There are country risk and currency risk.

Performance of existing Multi Cap Funds

There are multicap funds which have been investing without any 25% minimum limit in large cap, Midcap and smallcap. However, due to change in SEBI rule, these funds started aligning to this new rule in the last few months. While it might not be appropriate to refer such multicap funds, here is the performance of these funds in the last 3 to 10 years time frame.

Fund Name 3 Year
Annualised
5 Year Annualised 10 Year Annualised
Invesco India Multicap Fund 6.2% 12.6% 15.6%
Principal Multi Cap Growth Fund 6.7% 14.0% 13.0%
BNP Paribas Multi Cap Fund 7.6% 12.3% 12.7%
ICICI Prudential Multicap Fund 8.7% 12.6% 11.8%
Nippon India Multi Cap Fund 6.1% 10.3% 11.8%
Baroda Multi Cap Fund 9.0% 12.4% 9.3%

You may like: Quant Quantamental Fund invests based on algorithm and machine computations

Should you invest in Aditya Birla Sun Life Multi-Cap Fund NFO?

Aditya Birla Sun Life Multi Cap Fund invests a minimum of 25% in large cap, Midcap and smallcap stocks. New Multi Cap Funds rule is different from the existing ones till few months back, hence we do not know how allocation might benefit investors in short, medium and long term. High risk investors can invest in this scheme for medium to long term perspective. If you don’t want to test these new multi-cap funds, you can opt for existing flex-cap mutual funds that have a proven track record.

Did you like our review, so why not share it on your Twitter, Facebook and Telegram?

Suresh KP

2 thoughts on “Aditya Birla Sun Life Multi-Cap Fund NFO – Review”

  1. How do you see this NFO compared to other NFO’s in same category? Although my view is 5 year plus, would it be any different due to covid situation ?

    1. Since this is NFO, there is no comparison with other multicap funds as there is no historical performance. If your goal is 5 years only, then stick to hybrid / balanced funds.

Leave a Reply

Your email address will not be published. Required fields are marked *