Aditya 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?
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% |
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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.
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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 ?
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.