SBI Multicap Fund Direct Growth

SBI Multi Cap Fund Direct-Growth Fund is a multi-cap mutual fund that invests at least 25% of its assets in large-cap, mid-cap, and small-cap stocks. The remaining is invested in debt, money market instruments, RETIs, InvITs, and overseas securities. 

The fund is managed by Rama Iyer Srinavasan and Saurabh Pant, who bring diverse experience in deep equity research. Currently, the fund maintains a strong focus on the Financials, FMCG, Chemical and Healthcare sectors. 

The multi-cap fund by SBI is benchmarked against the Nifty 500 Multicap 50:25:25 TRI index. This includes a broader market of large-cap, mid-cap and small-cap companies in the same ratio as 50:25:25. This index serves as an appropriate benchmark to compare the performance of the fund against other stocks in the market.

Investment Strategy

SBI Multicap Fund follows a bottom-up stock-picking approach. The fund manager focuses on companies that have high-growth potential irrespective of short-term market movements. The funds’ portfolio is further built by following these key strategies:

-Diversification across market capitalization and themes

-Active management for the 25% share of each market cap

-Investment in derivatives and debt funds for hedging

Who Should Invest In SBI Multi Cap Fund?

Since the fund includes companies from all three market capitalization, it offers a balanced approach for investors who prefer the stability of a large-cap and the growth of an emerging business like that of a mid-cap and small-cap company. SBI multi-cap fund is suitable for investors who:

-Want exposure to multiple market caps

-Have a moderate to high risk appetite

-Want active portfolio management

Taxation On SBI Multi Cap Fund

The SBI multi-cap fund is taxed like any other equity fund. If you hold your investments for more than 1 year, a long-term capital gain tax (LTCG) is levied. Alternatively, if you purchase and sell within a year, a short-term capital gain tax (STCG) is levied.

Let’s understand your taxation on the SBI Multi Cap Fund with an example. Say, you invested ₹500,000 in the SBI multi-cap fund. Considering 2 scenarios, let’s see how your tax liability plays out.

Scenario 1: Sold within a year at a profit of ₹1,20,000

In this scenario, a short-term capital gain tax at 20% will be levied. So your tax would come to:

STCG Tax: ₹1,20,000 X 20% = ₹24,000

Scenario 2: Sold after 3 years at a profit of ₹3,50,000

In this scenario, since you held your funds for more than a year, a long-term capital gains tax will be charged. Under LTCG, investors receive an exemption of ₹1,25,000. This means out of ₹3,50,000, 1.25 lakh will be exempt. Therefore, your taxable gain comes to ₹2,25,000 (₹3,50,000 - ₹1,25,000). Your LTCG Tax would now come to:

LTCG Tax: ₹2,25,000 X 12.5% = ₹28,125

Allocation & Historical Returns

Currently, the fund's portfolio comprises 30.0% small-cap stocks, 36.82% large-cap stocks, and 27.30% mid-cap stocks.

With an AUM of ₹20559.0 crores, SBI Multicap Fund Direct Growth generated a return of 10.6% in 1 year, 22.8% in 3 years. while its benchmark index (Nifty 500) generated 3.7% in 1 year, 20.2% in 3 years, and 22.2% in 5 years.