Mahindra Manulife Multi cap fund is a multi
cap fund from the house of Mahindra Manulife mutual fund.
It is the largest equity fund in terms of
AUM from the Mahindra Manulife mutual fund house.
Unlike other multi cap mutual funds, Mahindra Manulife 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 1st February 2021.
|
Fund |
Mahindra Manulife Multi cap Fund |
|
Category |
Multi cap |
|
AUM (Rs Cr) |
1,120 cr (As on 31/05/2022) |
|
Fund Manager |
Ms Fatema Pacha & Mr Manish Lodha |
|
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 Why you need a financial plan
Mahindra Manulife Multi cap Fund Portfolio
As on 31st May 2022, the fund
was overweight on the following sectors:
- Financial
- Energy
- Capital Goods &
- Technology
While it was underweight on the following
sectors:
- Metals & Mining
- Healthcare
- Construction &
- Chemicals
Its allocation to the various caps as on 31st May 2022 was as
under:
|
Large cap |
46.25%
|
|
Mid cap |
28.05% |
|
Small cap |
25.71% |
Features of Mahindra Manulife Multi cap Fund
Mahindra Manulife Multi cap Fund is the
largest equity scheme from the house of Mahindra Manulife Mutual Fund.
It was initially a flexi cap fund but was
re branded as a multi cap fund after the rule change.
Despite this, it was anyway functioning as
a multi cap fund with a higher than usual mid cap allocation compared to most
of its peers.
Therefore the fund found it easier to
transition to a multi cap fund, only a few funds decided to stay on as a multi
cap fund.
It works neither strictly as a growth fund
nor a value fund but rather applies a strategy combining both investing style.
It is actively managed which explains why
it has a higher turnover ratio compared to its peers.
Taxation on Mahindra
Manulife Multi cap Fund
For the purpose of taxation, Mahindra Manulife
multi cap fund qualifies as an equity fund and the taxation charges applicable
on it are as follows:
LTCG
Long term capital gains tax better known as
LTCG is applied on any equity mutual fund when the gains from an equity mutual
fund which is held for more than a year is more than 1 lakh.
The LTCG rate is 10%.
Capital gains up to 1 lakh are exempt for
taxes.
There is no indexation benefit when
calculating LTCG.
STCG
Short term capital gains tax better known
as STCG is applied on gains from an equity mutual fund which is held for 12
months or less.
The STCG rate is 15%.
There is no ceiling benefit in STCG like
the 1 lakh ceiling in LTCG.
STCG is charged on from Re 1.
Additional reading: Click Here to read a detailed comparative analysis of Multi cap & Flexi cap funds.
Difference between
multi cap and flexi 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. |
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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