ITI multi cap fund review in detail

ITI multi cap fund is a multicap fund from the house of ITI mutual fund.

It also happens to be the first equity mutual fund from the house of ITI mutual fund.

Unlike other multi cap mutual funds, ITI multi cap fund decided to stay on as a multi cap fund rather than convert itself to a flexi cap fund like most other multi cap mutual funds did after new SEBI guideline on mandate of multi cap mutual funds came into effect from 1^st February 2021.

Fund	ITI Multi cap Fund
Category	Multicap
AUM (Rs Cr)	198 cr (As on 28/02/2021)
Fund Manager	Mr George Heber Joseph & Mr Pradeep Gokhale
Benchmark	Nifty 500 Multicap 50:25:25 TRI

What is a multi cap mutual fund?

A multi cap mutual fund needs to invest in the following manner now:

Minimum 25% investment into equity and equity related instruments of large cap companies (as opposed to no such restriction earlier).
Minimum 25% investment into equity and equity related instruments of mid cap companies (as opposed to no such restriction earlier).
Minimum 25% investment into equity and equity related instruments of small cap companies (as opposed to no such restriction earlier).

A multi cap mutual fund would now require a minimum of 75% investment in equity as opposed to 65% earlier.

Additional reading: Click Here to read more about why you should not invest based on past returns

Key features of ITI Multi cap fund

ITI multi cap was the first ever equity fund launched by ITI mutual fund.

It has a higher turnover ratio compared to other multi cap mutual funds making it one of the most actively managed multi cap funds.

It is far more diversified than other multi cap funds which can be ascertained also by its high number of stocks.

Fund Manager

The fund is co-managed by Mr. George Heber Joseph and Mr. Pradeep Gokhale.

Prior to ITI mutual fund, Mr. George Heber Joseph was associated with ICICI mutual fund and was managing their ELSS and multi cap funds among others along with their PMS.

Mr. Pradeep Gokhale on the other hand prior to ITI mutual fund was associated with Tata mutual fund and was managing their large cap, multi cap, large and mid cap as well as their tax savings mutual fund.

Both the fund managers therefore together bring to the table ample knowledge and experience.

New SEBI rules and ITI multi cap fund

With the new SEBI rules kicking in from 1^st February 2021, every multi cap fund now needs a minimum of 25% investment into each large, mid and small cap stocks.

Most multi cap funds after the announcement decided to convert themselves to a flexi cap in order to avoid the new mandate and continue to invest like the old mandate which was possible as a flexi cap fund.

ITI multi cap fund along with a few others though decided to stay on as a multi cap fund.

This makes a lot more sense considering its AUM and also its investing strategy ever since its inception.

ITI multi cap fund has always been an actively managed fund investing across all caps and sectors with meaningful allocation towards mid and small cap stocks.

It was always a slightly more aggressive multi cap fund compared to its peers so staying on as a multi cap fund with the new mandate is only continuing what was already set in motion.

With its AUM on the lower side compared to most of the bigger names, it also enjoys the benefit of liquidity which plays a pivotal role in mid and small cap investing.

Additional reading: Click Here to read about the overlapping issue with Mirae asset mutual fund schemes

Difference between flexi cap and multi cap mutual fund

A flexi cap fund needs a minimum of 65% investment in equity.	A multi cap fund needs a minimum of 75% investment in equity.

No compulsory investment in mid and small cap stocks	A multi cap fund needs to compulsorily invest a minimum of 25% each in mid and small cap stocks.

It can invest its complete portfolio into large cap stocks if needed.	It can invest only up to 50% of its complete portfolio in to large cap stocks at any given time.

Needs a lower minimum exposure to equity as compared to a multi cap fund.	Needs a higher minimum exposure to equity as compare to a flexi cap fund.

ITI multi cap fund portfolio

As on 28^th February 2021, the fund was overweight on the following sectors:

Financial
Energy
Healthcare &
FMCG

While it was underweight on the following sectors:

Technology
Construction
Chemicals &
Services

As previously mentioned the fund has always been an actively managed and well diversified fund which can be attested by the fact that as on 28^th February 2021, it has allocated its AUM to 120 stocks.

The most by any multi cap fund.

Its allocation to the various caps is as under:

Large cap – 36.26%
Mid cap – 34.53%
Small cap - 29.21 %

The fund had a below par period from June to September when its overall exposure to equity was at a bare minimum thereby missing out on the market rally.

Ever since then though the fund has recuperated well, more so since the beginning of 2021 during the period which not only has it left behind other funds but has also beaten the benchmark handsomely.

ITI Multi cap fund	11.32 %
S&P BSE 500 TRI	7.41 %
Multi cap category	9.91 %

From 1st January to 19th March 2021

Multi cap mutual funds list

List of Multicap funds as on 1^st March 2021

Baroda Multi cap

BNP Paribas Multi cap

ICICI Pru Multi cap

Invesco Multi cap

ITI Multi cap

Mahindra Manulife Multi cap

Nippon Multi cap

Principal Multi cap

Quant Active Multi cap

Sundaram Equity Multi cap

Is it good to invest in multi cap funds?

The most certain thing about a multi cap fund is that you can be sure that the fund at all times would be 25% invested each in large cap, mid cap and small cap stocks.

You can therefore be sure as to the investing methodology of the fund.

Needless to say, this would be on the more aggressive side since 50% would be invested in mid and small cap stocks.

Therefore, one needs to have patience and an appetite to go through periods of volatility since the fund will need 50% investment in mid and small cap stocks at all times.

Another point to keep in mind is that due to the compulsion of mid and small cap stocks, fund managers would more likely than not have a higher number of stocks in the portfolio as compared to earlier times when most multi cap funds would have around 40-50 stocks on an average.

A multi cap fund can find place in a portfolio if you can analyse and understand the fund, have a portfolio that is aligned with your goals and you have the requisite patience and stability to stay invested in a volatile market.

The current style of investing in a multi cap fund is no more like the earlier times when fund managers could take refuge in large cap stocks during volatile times and increase exposure in mid and small cap stocks based on attractive valuations.

A fund manager would feel restricted in moving across different sectors and caps considering she needs to follow the new mandate of 25% minimum investment in each large, mid and small cap stocks.

Therefore it would be foolish and naïve as an investor if you expect your multi cap fund to function in the same manner as it would earlier.

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Disclaimer : While due precaution has been undertaken in the preparation of this article, The Mutual Fund Guide or any of its authors will not be held liable for any investments based on the above article. The above article should not be considered financial advice and has been published only for your perusal. Due credit has been given in case wherever required, in case you feel any part violates any rights then do get in touch with us and we shall get it duly removed.

Mutual Fund investments are subject to market risks. Please read the offer document carefully before investing