Aditya Birla Sun Life Multi-Cap Fund: Will Diversified Allocation Offer Capital Appreciation?

Apr 26, 2021

The Indian economy is on the path of recovery; however, the uncertainties arising from the second wave of COVID-19 pandemic could have an impact on the first quarter of FY2021-22. But, post the second wave faster recovery can be expected, as the numerous growth stimulating policy measures and the quicker progress in vaccination may pave the way to escalate the economic recovery.

After the market disruptions in FY2020-21, several companies across all industries and market caps are looking for a solid earnings growth trajectory, and this economic recovery is likely to bring growth opportunities. The mid and small cap companies are expected to benefit from this economic revival and the large caps to enhance further.

If you want to take advantage of the opportunity to invest in high growth potential businesses across market caps, Multi-cap funds are a good option. A Multi-cap fund is an equity-oriented mutual fund that allows investors to allocate a minimum of 25% of the portfolio to each large cap, mid cap, and small cap to ensure investment diversification across market capitalization.

Aditya Birla Sun Life Mutual Fund has launched Aditya Birla Sun Life Multi-cap Fund; it is an open-ended equity scheme investing across large cap, mid cap & small cap stocks.

On the launch of this fund Mr A. Balasubramanian MD & CEO of Aditya Birla Sun Life AMC Ltd. said, "Large-caps are proven quality compounders and must-haves for any portfolio but from a long term perspective, a healthy exposure to mid and small cap segment is proven to be growth enhancers and rewarding. Aditya Birla Sun Life Multi-Cap Fund combines the power of all three to offer a curated portfolio of high conviction stocks across the three market caps. The fact that one can invest in this through SIPs makes it a convenient way to participate in India's long term growth story"

He further added "With an easy fiscal and monetary policy to support economic growth, low interest rate, surplus liquidity, conducive policies aligned to Production Linked Incentives (PLI), Aatmanirbhar Bharat, Development Finance Institution (DFI), labour and industrial reforms, unprecedented digital adoption, brings forth multiple macro advantages that reaffirms the expected growth momentum of Indian economy which can fuel all the segments of the market especially mid and small cap companies."

Table 1: Details of Aditya Birla Sun Life Multi-cap Fund

Type An open-ended equity scheme investing across large cap, mid cap & small cap stocks. Category Multi-cap Fund
Investment Objective 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. The Scheme does not guarantee/indicate any returns. There can be no assurance that the schemes' objectives will be achieved.
Min. Investment Rs 500/- and in multiples of Re 1 thereafter. Additional purchase Rs 500/- and in multiples of Re 1 thereafter. Face Value Rs 10/- per unit
SIP/STP/SWP Available
Plans
  • Direct
  • Regular
Options
  • Growth
  • Payout of Income Distribution cum Capital Withdrawal Option
Entry Load Not Applicable Exit Load
  • For redemption / switch-out of units on or before 365 days from the date of allotment: 1.00% of applicable NAV.
  • For redemption / switch-out of units after 365 days from the date of allotment - Nil
Fund Manager
  • - Mr Mahesh Patil
  • - Mr Dhaval Shah
  • - Mr Harshil Suvarnkar
  • - Mr Vinod Bhat
Benchmark Index Nifty 500 Multicap 50:25:25 TRI
Issue Opens: April 19, 2021 Issue Closes: May 03, 2021
(Source: Scheme Information Document)


What will be the Investment Strategy for Aditya Birla Sun Life Multi-cap Fund?

Aditya Birla Sun Life Multi-cap Fund aims to achieve its investment objective for long-term growth of capital by predominantly investing in Large, Mid & Small cap companies.

As per new rules defined by SEBI for Multi-cap funds, to ensure diversification of investment across market caps, minimum investment of 25% in each market cap segment is mandated. This scheme will invest 25-45% in large cap and a minimum of 25-35% each in mid cap and small cap stocks. The portfolio will consist of 50-60 stocks, as the fund will invest in 15-20 companies each of large, mid and small cap.

The Scheme would adopt top-down and bottom-up approach of investing and will aim at being diversified across various industries and / or sectors and/ or market capitalization. The investment emphasis of the scheme would be on identifying companies with sound corporate managements and prospects of good future growth.

Being in the Multi-cap category, the scheme has flexibility in terms of allocation across market cap and it will focus on companies with higher growth potential. In addition, the scheme will offer exposure to emerging sectors like digital or speciality chemicals, which can offer a long-term growth trajectory.

The scheme may also invest a portion in in short-term opportunities, provided underlying values supports these opportunities and investment in IPOs, concept stocks and other primary market offerings that meet the investment criteria.

About the benchmark

The NIFTY500 Multicap 50:25:25 index aims to measure the performance of portfolio of large, mid and small market capitalisation companies with target weights assigned to each size segment. It includes all companies that are part of NIFTY 500 index.

In NIFTY500 Multicap 50:25:25 index, the total weight of each of these three segments (Large, Mid and Small cap) is fixed at 50%, 25% and 25% respectively at every quarterly rebalance date.

This scheme apart from investing 80% of its assets in equity & equity related instruments across large, mid and small cap companies. It will also invest in debt & money market instruments and other liquid instruments or both. The scheme may have prudent exposure to Futures & Options (F&O) to capture opportunities arising out of market imperfection and to hedge the portfolio, whenever necessary.

Under normal circumstances, the asset allocation will be as under:

Table 2: Asset Allocation of Aditya Birla Sun Life Multi-cap Fund

Instruments Indicative Allocation (% of net assets) Risk Profile
Minimum Maximum High/Medium/Low
Equity & Equity related instruments across large, mid and small cap companies* 80 100 High
Debt and Money Market Instruments 0 20 Low to Medium
*The Scheme will invest a minimum of 25% of total assets each in Large, Mid and Small Cap stocks.
(Source: Scheme Information Document)


​Who will manage Aditya Birla Sun Life Multi-cap Fund?

Mr. Mahesh Patil and Mr. Dhaval Shah will be the designated Fund Managers for investments in Equity securities, Mr. Harshil Suvarnkar for investments in Debt securities and Mr. Vinod Bhat for overseas investments of the scheme.

Mr Mahesh Patil is Co-Head Equity at Aditya Birla Sun Life Asset Management Company Ltd. and has over 26 years of experience in fund management, equity research and corporate finance. Prior to this, Mr Patil was associated with Reliance Infocom Ltd. in Business Strategy, and as a Sr. Research Analyst with Motilal Oswal Securities and Parag Parikh Financial Advisory Services.

His qualification includes, B.E. (Electrical), MMS (JBIMS) and CFA (ICFAI). Currently funds managed by him are; Aditya Birla Sun Life Frontline Equity Fund, Aditya Birla Sun Life Focused Equity Fund, Aditya Birla Sun Life PSU Equity Fund.

Mr Dhaval Shah is Associate Vice President - Investments at Aditya Birla Sun Life Asset Management Company Ltd. and has over 14 years of work experience in Equity Capital Markets. Prior to this, he was working with Morgan Stanley Investment Management, Reliance Capital Asset Management Ltd. and Edelweiss Securities.

Mr Shah's qualification includes, B.Com, CFA and MMS - Finance (Post graduation). Currently funds under his management are; Aditya Birla Sun Life Regular Savings Fund, Aditya Birla Sun Life Equity Hybrid '95 Fund and Aditya Birla Sun Life Pharma & Healthcare Fund.

Mr Harshil Suvarnkar is a Fund Manager at Aditya Birla Sun Life Asset Management Company Ltd. and has an overall experience of 10 years in the financial services industry. Prior to this, he was associated with Indiabulls Housing Finance Limited for 10 years as Head - Markets, Treasury handling treasury investments, Asset Liability Management (ALM) and capital market borrowing.

His qualification includes, Masters in Management Studies (Finance), Post Graduate Diploma in Securities Law & B. Com. Currently other schemes he manages are; Aditya Birla Sun Life Regular Savings Fund, Aditya Birla Sun Life Banking & PSU Debt Fund, Aditya Birla Sun Life Floating Rate Fund, Aditya Birla Sun Life Equity Hybrid '95 Fund, Aditya Birla Sun Life Equity Savings Fund, Aditya Birla Sun Life Bal Bhavishya Yojna and Aditya Birla Sun Life Retirement Fund.

Mr Vinod Bhat is Portfolio Manager & Head - Knowledge Management (Investments - Equity) at Aditya Birla Sun Life Asset Management CompanyLtd. and has an overall experience of 18 years with over 12 years in the financial markets and investment banking space. Prior to this, he was the Vice President - Corporate Strategy and Business Development with Aditya Birla Management Corporation Pvt. Ltd. He had also worked with Ocean Park Advisors (USA) as a Senior Associate Investment Banking and as Associate - Investment Banking with Credit Suisse (USA).

His qualification includes CFA (USA), MBA Finance - Wharton University of Pennsylvania (USA), M.S. Industrial Engineering - Pennsylvania State University (USA) and B.Tech & Mechanical Engineering - IIT Bombay. Currently schemes under his management are; Aditya Birla Sun Life Global Emerging Opportunities Fund, Aditya Birla Sun Life Global Real Estate Fund, Aditya Birla Sun Life Asset Allocator FoF, Aditya Birla Sun Life Financial Planning FoF, Aditya Birla Sun Life Special Opportunities Fund and Aditya Birla Sun Life Flexi Cap Fund.

Fund Outlook - AdityaBirla Sun Life Multi-cap Fund

The Multi-cap investment approach enables investors for diversification by allocating the assets to all three market cap segments under a single fund.

Aditya Birla Sun Life Multi-cap Fundseeks out opportunities across the three market caps; it combines the stability of large caps with high growth potential of mid-caps and small caps under one portfolio. This scheme's disciplined and focused approach along with the bottom-up investing strategy is directed towards identifying opportunities to invest in fast growing sectors/companies across the spectrum.

Growth-promoting policy measures that are focused across industries to promote economic growth will bring inclusive and diverse growth to companies of all sizes, allowing this scheme to take advantage of new opportunities. With around half of its assets invested in mid cap and small cap companies, the scheme could be prone to higher volatility in the short term, though the presence of large cap stocks could offset some of the risk.

This scheme is suitable for investors having high-risk appetite and seeking to achieve market cap based diversified allocation. You must ensure you have a long investment horizon of at least 5-7 years to gain significant returns and your investment objective aligns with the fund's objective.

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Warm Regards,
Mitali Dhoke
Jr. Research Analyst

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