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Why You Should Invest in Multi-Cap Scheme

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Why You Should Invest in Multi-Cap Scheme
March 11, 2023
We have already welcomed the New Year and as always, the resolutions regarding multiple aspects of our lives have already been made. A very crucial part of these resolutions is formed by the saving and investment decisions that we make. These investment decisions are crucial not just because they offer financial coverage but also because of the fact that we live in times of market-fluctuations and therefore, the kind of returns that will be generated will be decided by the investment decisions that we take today. When it comes to investment, especially the market-linked investments, people often consider mutual funds (MFs) to be one of the most credible options. However, before investing in mutual funds, it is imperative that we consider each and every facet carefully.

Investing in mutual funds is an inclusive decision, where mutual fund advisors and managers manage your fund options so that optimum returns can be generated. There are a lot of options where you or your fund manager can chose to place the funds so that sufficient returns can be generated over a period of time. These options come in the form of equity, or debt or mixed fund options. When the mode of investment is stock, generally there are three types of stock fund options. These are:

  1. Large cap stocks:

    These are the stocks that are listed by the top corporate companies and offer a low-risk and high-credibility option. The main benefit of investing in such stocks is that the returns are guaranteed and the invested funds are rather safe. This is because the companies are renowned and there is no risk of any of market-based fluctuations associated with these stocks. However, the limitation is that the returns may not be as high as desired.

  2. Mid-cap stocks:

    These are the stocks that are listed by tier-2 or one-ladder below companies. These stock values are not as high as that of large-cap ones and are not as low as that of small-cap ones. These stocks offer better growth rates than large-cap stocks and the risk-factor is also a bit higher.

  3. Small-cap stocks:

    These are the stocks that are listed by small or new companies. The risk-factor associated with investment in small-cap funds is quite high. However, the projected returns are also higher than either large-cap or mid-cap stocks.

Given this broad classification, it becomes easier for us to understand the option that will enable an optimum returns on investment. This is the option of investing in multi-cap stock funds. Multi-cap stocks fund options imply investment in multiple stocks across the valuation figures. In any investment method, flexibility is the key and often decides the actual returns that will be garnered through it. This flexibility is represented by the multi-cap investment option as through this option, the fund manager allocates specific funds to large, mid and small cap options. This way, the funds are allocated in a balanced manner and consequently, the returns generated are also optimum.

HDFC Life offers saving and investment options that are aimed at securing your financial reserves and making your funds grow. For details, click on the mentioned link: https://www.hdfclife.com/savings-plans .

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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