Systematic risk — This refers to the risk inherent to any investment which can come from economic, political or even social factors. Multicap funds disadvantageously mentioned above are also subject to this risk, that is negative changes in the economic environment (e.g. ship downturn) may result in losses to the whole portfolio.

Conclusion:
Multicap funds can be appealing for investors who seek a more balanced equity investment – one that aims for growth along with a measure of stability. These instruments allow investors to benefit from the performance of large, mid-sized and small companies – from their comparatively safer large-cap shares to more risk-oriented mid and small-cap stocks. But such investments may not be appropriate to very risk averse investors due to the presence of riskier stocks. It is important as always to examine one’s risk appetite and how it compares with their investment objectives prior to participating in a multicap fund.