Multi-cap funds are equity mutual funds that invest its assets in the stocks of companies across market capitalization i.e in large-cap,mid-cap & small-cap.

In the long run, multi-cap funds can provide better and more stable returns than other categories as they have the flexibility of investing across different capitalizations as per the opportunities arising in the markets.

Fund	1-Year Returns	3-Year Returns	5-Year Returns
Kotak Standard Multi Cap Fund	-14.40	0.69	7.42
ABSL MNC Fund	-7.30	1.76	4.71

1. Kotak Standard Multi Cap Fund:

Kotak Standard Multi Cap Fund is the top performing fund in the multi cap category for investments of longer horizons. The fund has been able to beat the returns of its benchmark & category average returns over the long horizons of 5-10 years with good margins.

The fund has been managed by Mr.Harsha Upadhyaya since August 2012.

Worth of Investments

A Lump Sum Investment of Rs.1 Lacs for 5 Years would have been grown to Rs.1.42 Lacs.
SIP Investments of Rs.10,000 every month for 5 Years would have been grown to Rs.6.55 Lacs.

Analysis

Portfolio: The fund has a diversified portfolio of a total of 55 stocks with a major exposure of approximately 26% to the Financial sector. With an AUM of Rs.25,984 Crores, the Kotak standard multicap fund has the highest AUM in the multi cap category. For the Equity Investments, the fund has invested approx. 74% of its assets in large cap stocks, 24% in mid cap stocks & rest of its assets in Small Caps.The Fund’s Top 3 major shareholdings include exposures in Reliance Industries, ICICI Bank & HDFC Bank. Along with the equity investments, the fund has approximately 7.1% of its portfolio as Cash & Cash Equivalents & 0.9% in debt securities.
Consistency: The fund manager has been able to generate alpha for the 4 years out of the last 5 years calculated for the annual returns. Alpha is the excess returns generated by the fund over the benchmark returns.
Volatility: The fund has a low standard deviation(20.29) as compared to the benchmark i.e S&P BSE 500 (21.09) & its category average(20.77). The standard deviation of a fund essentially denotes the volatility of the fund.A lower standard deviation than the benchmark & category average would mean that the fund is expected to be less volatile as compared to others.
Valuations: On the valuations front, the important valuation metrics like P/B ratio(2.60), P/E multiple(22.46) which indicates the investment strategy followed by the fund are currently higher than the fund’s benchmark S&P BSE 500 Index (P/B- 2.15, P/E- 20.99). The higher valuations state that the fund has a growth strategy of investing & has been invested in stocks with high earnings expectations from the market.

2. ABSL MNC Fund:

Though not in the multi cap category, ABSL MNC Fund exhibits the features of a multi cap fund by having an investment strategy of investing in MNC companies across market capitalizations.The fund has given excellent returns of around 14% over the time frame of last 10 years.

The fund has been managed by Mr.Ajay Garg since June 2009.

Worth of Investments

A Lump Sum Investment of Rs.1 Lacs for 5 Years would have been grown to Rs.1.24 Lacs.
SIP Investments of Rs.10,000 every month for 5 Years would have been grown to Rs.6.37 Lacs.

Analysis

Portfolio: The fund has a diversified portfolio of a total of 41 stocks with a major exposure of approximately 30% to the Healthcare sector. For the Equity Investments, the fund has invested approx. 18.5% of its assets in large cap stocks, 69% in mid cap stocks & rest of its assets in Small Caps.The Fund’s Top 3 major shareholdings include exposures in Bayer CropScience, Pfizer & Honeywell Automation. Along with the equity investments, the fund has approximately 2.8% of its portfolio as Cash & Cash Equivalents.
Consistency: The fund manager has been able to generate alpha for the 3 years out of the last 5 years calculated for the annual returns. Alpha is the excess returns generated by the fund over the benchmark returns.
Volatility: The fund has a lower standard deviation(18.15) as compared to its benchmark i.e S&P BSE 500 (21.09). But it is slightly higher than its category average(17.23).The standard deviation of a fund essentially denotes the volatility of the fund. A lower standard deviation than the benchmark would mean the fund is expected to be less volatile than its benchmark, And a higher SD than the category average is expected to result in a high volatility by the fund as compared to its category. However, With higher volatility there are possibilities of higher returns than the category average returns & same otherwise.
Valuations: On the valuations front, the important valuation metrics like P/B ratio(3.66), P/E multiple(45.18) which indicates the investment strategy followed by the fund are currently higher than the fund’s benchmark S&P BSE 500 Index (P/B- 2.15, P/E- 20.99). The higher valuations state that the fund has a growth strategy of investing & has been invested in stocks with high earnings expectations from the market.

#5. Best Banking & PSU Funds - Best Mutual Funds to Invest in for Long-Term

Banking & PSU Funds are debt mutual funds that invest at least 65% of their assets in the securities & bonds issued by Banks, Public sector companies & financial institutions.

Fund	3-Year Returns	5-Year Returns	YTM
Aditya Birla Sun Life Banking & PSU Debt Fund	8.09%	8.96%	5.97
Franklin India Banking & PSU	8.44%	8.60%	6

ABSL Banking & PSU Debt is an excellent choice for investment in the Banking & PSU Debt Fund category. The fund is having an exposure of 100% of its assets in AAA rated debt securities.The fund has been managed by Mr.Kaustubh Gupta since September 2009 & Mr. Maneesh Dangi since April 2017.

Worth of Investments

A Lump Sum Investment of Rs.1 Lacs for 5 Years would have been grown to Rs.1.54 Lacs.
SIP Investments of Rs.10,000 every month for 5 Years would have been grown to Rs.7.52 Lacs.

Analysis

Modified Duration: Modified duration is the metric for measuring the sensitivity of the fund’s underlying bonds prices to the fluctuations or movements in interest rates in the economy. A fund with a higher modified duration would be more volatile as compared to its peers & same otherwise. MD of ABSL Banking & PSU is 3.37 which is higher than the category average modified duration of 2.96. This means for a 1% change in interest rates in the economy, the fund is expected to fluctuate by 3.37%.

Average Maturity: The fund’s average maturity is the weighted average time to maturity of the underlying bonds. The bonds with higher average maturity are more sensitive to the interest rate changes & therefore, they have higher volatility of returns. ABSL Banking & PSU has an average maturity of 4.57 years which is higher than the category average of 3.79 years. This implies the fund is expected to exhibit higher volatility in the portfolio returns than the others.

2. Franklin India Banking & PSU is also a good option in the Banking & PSU category. The fund has an exposure of near about 97% of its assets in AAA rate high quality papers.The fund has been managed by Mr.Sachin Padwal-Desai since April 2014 & Mr. Umesh Sharma since April 2014.

Worth of Investments

A Lump Sum Investment of Rs.1 Lacs for 5 Years would have been grown to Rs.1.51 Lacs.
SIP Investments of Rs.10,000 every month for 5 Years would have been grown to Rs.7.53 Lacs.

Analysis

Modified Duration: Modified duration is the metric for measuring the sensitivity of the fund’s underlying bonds prices to the fluctuations or movements in interest rates in the economy. A fund with a higher modified duration would be more volatile as compared to its peers & same otherwise. MD of Franklin India Banking & PSU is 2.05 which is lower than the category average modified duration of 2.96. This means for a 1% change in interest rates in the economy, the fund is expected to fluctuate by 2.05%.

Average Maturity: The fund’s average maturity is the weighted average time to maturity of the underlying bonds. The bonds with higher average maturity are more sensitive to the interest rate changes & therefore, they have higher volatility of returns. Franklin India Banking & PSU has an average maturity of 2.60 years which is lower than the category average of 3.79 years. This implies the fund is expected to exhibit lower volatility in the portfolio returns than the others.

#6. Best Corporate Bond Funds - Best Mutual Funds to Invest in for Long-Term

Corporate Bond Funds are the debt mutual funds that invest at least 65% of their assets in the AA+ & above or highest rated debt securities like bonds, papers, debentures issued by the Corporates(Public or Private).

Fund	3-Year Returns	5-Year Returns	YTM
HDFC Corporate Bond Fund	8.46%	8.86%	6.23
ICICI Pru Corporate Bond Fund	8.36%	8.44%	6.35

1. HDFC Corporate Bond Fund is one of the top funds in the corporate bond fund category. The fund has an exposure of 100% of its assets in AAA rated securities. The fund has been managed by Mr.Anupam Joshi since October 2015.

Worth of Investments

A Lump Sum Investment of Rs.1 Lacs for 5 Years would have been grown to Rs.1.53 Lacs.
SIP Investments of Rs.10,000 every month for 5 Years would have been grown to Rs.7.56 Lacs.

Analysis

Modified Duration: Modified duration is the metric for measuring the sensitivity of the fund’s underlying bonds prices to the fluctuations or movements in interest rates in the economy. A fund with a higher modified duration would be more volatile as compared to its peers & same otherwise. MD of HDFC Corporate Bond Fund is 2.88 which is higher than the category average modified duration of 2.61. This means for a 1% change in interest rates in the economy, the fund is expected to fluctuate by 2.88%.

Average Maturity: The fund’s average maturity is the weighted average time to maturity of the underlying bonds. The bonds with higher average maturity are more sensitive to the interest rate changes & therefore, they have higher volatility of returns.HDFC Corporate Bond Fund has an average maturity of 3.78 years which is higher than the category average of 3.30 years. This implies the fund is expected to exhibit higher volatility in the portfolio returns than the others.

2. ICICI Prudential Corporate Bond fund is also a good option for investment in this category.This fund also has an exposure of 100% of its assets in AAA rated securities.The fund has been managed by multiple managers including Ms.Chandni Gupta since August 2016,Mr. Rahul Goswami since October 2017 & Mr.Anuj Tagra since March 2020.

Worth of Investments

A Lump Sum Investment of Rs.1 Lacs for 5 Years would have been grown to Rs.1.50 Lacs.
SIP Investments of Rs.10,000 every month for 5 Years would have been grown to Rs.7.46 Lacs.

Analysis

Modified Duration: Modified duration is the metric for measuring the sensitivity of the fund’s underlying bonds prices to the fluctuations or movements in interest rates in the economy. A fund with a higher modified duration would be more volatile as compared to its peers & same otherwise. MD of ICICI Prudential Corporate Bond Fund is 2.56 which is lower than the category average modified duration of 2.61. This means for a 1% change in interest rates in the economy, the fund is expected to fluctuate by 2.56%.

Average Maturity: The fund’s average maturity is the weighted average time to maturity of the underlying bonds. The bonds with higher average maturity are more sensitive to the interest rate changes & therefore, they have higher volatility of returns.ICICI Prudential Corporate Bond Fund has an average maturity of 3.52 years which is higher than the category average of 3.30 years. This implies the fund is expected to exhibit higher volatility in the portfolio returns than the others.

Investors with a very long horizon of more than 10 years can also consider investing in top long term debt funds like L&T triple ace bond fund or ABSL Income fund given their 100% exposures in high quality papers of AAA ratings.However, the high modified duration of these funds(usually around 6)could be leading to highly volatility of returns over the short period of time.

Final Note for Investors

The portfolio allocation may vary among investors from the mentioned broad categories as each individual has its own needs & financial requirements, therefore investments should be planned accordingly. Also, the portfolio needs rebalancing or requires reconstitution sometimes, it would be better to connect with your financial advisor to cater your portfolio review & rebalancing needs after a periodic interval.

Investors should also note that the above mentioned top mutual funds do not guarantee any successful returns on Investments as markets are highly uncertain.

More Information:

Bharat Bond ETF - Meaning, Benefits, Price, Interest Rate, Review

Shariah Compliant Mutual Funds - Types, Who can Invest, Minimum Investment

Equity Balanced Funds - Benefits, Taxation, How to Choose

How to Invest in Mutual Funds?

Index Funds - Meaning, Purpose, How to Work, Risk, Returns

Section 80D - Deductions, Tax Benefits, Claim Amount, Example

Deduction under Section 80TTA

PM Vaya Vandana Yojana (PMVVY): Scheme Eligibility, Interest Rate, Process to Apply

Kisan Vikas Patra (KVP) Scheme: Benefits, Types, Interest Rates, Eligibility, Calculation