Flexicap mutual funds are a dynamic and versatile option for investors seeking diversified exposure across the market capitalization spectrum. Let’s take a deeper look at what they are and how they can benefit your portfolio:
What are Flexicap Mutual Funds?
Unlike other equity funds classified by market cap (large, mid or small), flexi-cap funds have the flexibility to invest. Companies of all market capitalizations. This allows them to:
- Adapting to market conditions: A fund manager can dynamically adjust a portfolio’s allocation to different market segments based on their approach, potentially maximizing returns.
- Get Development Opportunities: They can invest in emerging small-cap companies that have high growth potential or invest in larger companies that offer stability and profitability.
- Reduce portfolio risk: Diversification in market caps helps reduce the risk associated with certain segments facing downturns.
Advantages of investing in Flexi Cap Funds:
- Single Fund Solution: Offers entire market exposure in one convenient option.
- Active Portfolio Management: Fund managers leverage their expertise to identify promising investment opportunities across market caps.
- High Profit Potential: By investing in stable large-caps as well as high-growth small-cap companies, these funds can potentially outperform single-cap funds over the long term.
- Low risk: Diversification in market caps helps mitigate the impact of downturns in certain segments.
Things to consider before investing in flexicap funds:
- High Volatility: Compared to single-cap funds, flexi-cap funds face higher volatility due to exposure to different market segments with different risk profiles.
- High expense ratio: These funds may have slightly higher expense ratios due to the active management style and research involved.
- Fund Manager Skills: The success of a flexi-cap fund depends heavily on the fund manager’s ability to identify and allocate the right companies across market caps.
Popular Flexicap Mutual Funds in India:
- SBI Flex Cap Fund
- HDFC Flexi Cap Fund
- Parag Parekh Flexi Cap Fund
- Axis Focused 25 Fund
- Franklin India Flexicap Fund
Choosing the Right Flexicap Fund:
- Investment Objectives: Align your goals with the fund’s investment strategy and risk profile.
- Fund Performance: Estimate the fund’s historical performance, risk-adjusted returns, and expense ratios.
- Fund Manager Track Record: Analyze the fund manager’s experience and success in managing flexi-cap funds.
Remember, past performance is not indicative of future results. Do thorough research, compare different options, and consider consulting a financial advisor before investing in any flexicap mutual fund.
