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NEW DELHI: HDFC Asset Management Company has announced the launch of a new fund offer (NFO) for an open-ended equity scheme called HDFC Multi Cap Fund. The fund will open for subscription on 23 November and close on 7 December. The scheme will be benchmarked to the Nifty500 Multicap 50:25:25 Total Return Index (TRI).

The new fund will make mandatory allocation of minimum 25% of its total assets each in large-, mid-, and small-cap companies, while the balance 25% of its total assets allocated based on market view of the fund manager. The fund will aim to generate long-term capital appreciation through a controlled exposure to large-, mid- and small-caps.

Historically, different market-cap segments have outperformed each other at different points in time.

According to the fund house, out of the last 16 financial years (FY06 to FY21), large-caps have been the top performing market cap segment in six years, mid-caps in three years and small-caps in seven years.

“However, deciding the allocation to large-, mid- and small-caps is not easy for most investors. The multi-cap approach helps investors focus on diversification instead of predicting outperformance or underperformance of different market cap segments," HDFC MF, which has 4.48 trillion in assets under management (AUM), said in a note.

In terms of investment strategy, HDFC Multi Cap Fund will follow a mix of top down and bottom-up approach to stock selection. As per the current investment strategy, the scheme will invest 60%-75% of total assets in large- and mid-caps. Further, it will invest 25%-40% of total assets in small caps.

The scheme will invest without a style bias and aims to capture opportunities across growth, value and turnaround companies.

The fund will be managed by Gopal Agrawal, who has nearly 19 years of experience in fund management and equity research.

Commenting on the launch, Agrawal, said, “We have observed that different market cap segments perform differently at different points in time. Going forward, the structural growth drivers and supportive external environment bode well for India's secular growth story. Further, robust earnings growth outlook and favorable macroeconomic environment bode well for equities over medium to long term."

The minimum investment amount during the NFO period would be 5,000, and in any amount, thereafter. The exit load on redemption or switching out within one year from the date of allotment would be 1% and nil, thereafter.

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