Multicap Fund is a subcategory under Equity category of mutual funds, where the fund manager has flexibility to invest among large ,mid & small cap funds dynamically after accessing the available oppurtunities in the market. In this case, Fund manger has to keep atleast 25% in each category among smallcap,midcap and largecap mutual funds.Here the minimum allocation to equities would be atleast 70%.
In other scenario if we talk about Flexicap mutual fund, it works on the same principle as of multicap fund but the applicability of 35 % doesnot applied here whereas it has the flexibility to get exposure of the categories depending upon the available oppurtunities.Here the minimum allocation to equities would be 65%.
Both the categories are open ended and no lock-in applies on them. An investor can invest either Lumpsum amount at once or through SIP with periodic investments. As for taxation ,it comes under equity category where redemption before one year triggers 15% on profits as short term capital gains. If the same is redeemed after a year, the profits are tax free upto Rs. 100,000 above which long term capital gains would be applicable at flat 10%.
Multicap or Flexicap Funds are considered as the best bid in the volatile market and is suitable for investors with Moderate to high risk category as this fund has the capacity to generate good returns as well as can be riskieer too.(Discuss to your advisor before investing).
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