SBI Multi-Cap Fund NFO: A Detailed Review

Table Of Contents:

• What Is A Multi-cap Fund?
• Features Of SBI multi-cap Fund
• Fund Managers
• AMC: SBI Mutual Fund
• Investment Strategy of SBI Multi-cap Fund
• Advantages of SBI Multi-cap Fund
• Disadvantages of SBI Multi-cap Fund
• Take Aways: SBI Multi-cap Fund NFO Review

What Is A Multi-cap Fund?

A multi-cap fund is a diversified mutual fund that can invest across market cap in the stock market. 

Similarly, the SBI Multi-cap fund is an open-ended equity scheme that invests across the small, mid, and large market caps.

You may have the wrong implication that Flexi-cap and multi-cap are the same. But in multi-cap, funds are forced to be invested in small-cap, mid-cap, and large-cap stocks. 25% of the capital invested is in each cap stock, and the remaining 25% is in the fund manager’s command. 

But a mandatory 65% of equity is necessary for Flexi-cap funds.

Features Of SBI Muti-cap Fund:

Fund Managers:

1.) Mr. R. Srinivasan 

• 42years old and currently working as Head of Equities in SBI.
• He brings 19 years of experience and has previously worked with FCH, Principal PNB AMC, Motilal Oswal, Oppenheimer & Co, and others.
• He is managing assets worth over Rs. 16,000 crores under more than 10mutual fund schemes.
• He is a B.com and AICWA graduate. 

2.) Mr. Mohit Jain

• He’s a 28 years old Credit Analyst.
• A B.E. and a CFA graduate with 5years of experience.
• Apart from this SBI Multi-cap fund, he is managing 7funds for SBI Mutual Fund. 
• Heis co-managing 2 of the 7funds with fund manager Mr. Srinivasan. 

AMC: SBI Mutual Fund

• SBI Mutual Fund is one of the top 5 AMCs in India in terms of AUM.
• It is managing assets worth Rs.5,23,198 crores as of June 2021.
• It has been in the asset management industry for almost 35 years.
• At present, it has a base of 5.4 million portfolios.
• Their services range from Mutual Funds Schemes, Offshore Funds, and Portfolio Management.

Investment Strategy of SBI Multi-cap Fund:

• The SBI Multi-cap Fund has asset allocation across the market cap. Hence the concentration risk is reduced with diversification.
• Usage of the bottom-up approach to select stocks makes the stock selection process focus more on undervalued stocks. Usually, they will pick all companies with better growth potential. Then undervalued stocks are selected.
• SBI multi-cap fund follows sectoral diversification. So, your investments are not constrained to specific sectors. The aim here is to look for the viability of the business than the sector of operation. Few of the included sectors are financial services, Consumer goods, Oil and gas, and Metals.
• SBI multi-cap fund uses active stock selection. So, your funds will be invested in stocks handpicked by the fund manager and may give better returns than the benchmark.
• SBI multi-cap fund can have 10 % exposure to REITs and InvITs.

Advantages of SBI Multi-cap Fund:

• As a result of the bottom-up approach, sector bias might get eliminated.

• Multi-cap fund is better for a core portfolio and can align with your long-term goals. 
• Diversification is good, as your funds will get the privilege of investment across different market caps.
• SBI multi-cap fund has the potential of maintaining a diversified portfolio. Because here investments are mandatory to be spread across all market caps.
• Less investment risk compared to small-cap and mid-cap funds.
• In the Short-term, the SBI Multi-cap Fund can give fluctuating returns. In the long term, this fund has the potential for capital appreciation and can beat inflation.

Disadvantages of SBI Multi-cap Fund:

• Diversification is indeed an advantage. Sometimes over-diversification might occur, which dilutes your overall returns.
• Multi-cap investments rely on the decisions made by the fund managers. SBI Multi-cap fund has reasonably good managers. But their fund management style for this fund is unknown. Hence using SBI multi-cap fund is a blind risk.
• NFO s have no track record. Without a track record, you cannot assess the performance potential or take a calculated risk. So, it is better to wait till this fund gets a better track record before investing.
• SBI multi-cap fund is yet to create its portfolio. Hence no clear idea about the stocks to be selected. Investment in SBI multi-cap fund NFO is risky since we cannot analyze stocks inside the portfolio.

Take-Aways: SBI Multi-cap Fund NFO Review

• Conservative investors and investors with financial goals should wait until the fund builds a decent track record. 
• Instead, you can invest in existing multi-cap funds with a good track record over 7-10 years.
• It takes time to create a proper portfolio and show consistent performance. So, we have to wait for it before conducting research. Without this, investment in this NFO will be a blind risk.
• Aggressive investors with spare money may try investing in SBI multi-cap fund as a trial with minimum investment.

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