In this hectic schedule, investors are in search of investment that offers flexibility from the numerous investment options available in the market. Flexi Cap Mutual Funds are an excellent and unique option when it comes to mutual funds, as they offer diversification and flexibility. These funds offer an adaptable approach in the equity market for people who want to diversify their investment flexibly according to the market exposure. As an investor, if you are also seeking mutual funds that can adapt to market shifts and balance the risk and returns accordingly, then this fund is an ideal option for investors.
Moreover, investors can get in touch with us at 9810325138 to learn more and create a future with financial freedom.
What Are Flexi Cap Mutual Funds?
Flexi Cap mutual funds are a category of equity mutual funds that offer flexibility for fund managers to utilize their strategy to invest in the market capitalization depending on the market shift to balance the potential of growth and market risk. These funds have no limitations, and they can flexibly distribute their assets among small-cap, mid-cap and large-cap. According to market trends, fund managers have the flexibility to modify the portfolio to respond to sector performance and economic trends.
Key Characteristics Of Flexi Cap Funds
No Fixed Allocation to Market Caps:
In a Flexi Cap Mutual Fund, there is no obligation for fixed allocation of funds in particular market caps of large-cap, mid-cap, and small-cap companies, unlike multi-cap funds. Fund managers can flexibly allocate the funds in any capitalisation as per the market trends and opportunities.
Dynamic Portfolio Management:
In a bull market, the fund manager can rotate the portfolio to include large-cap stocks for stability, or, in a recovering or bullish economy, it can be shifted to include small—or mid-cap stocks for higher growth potential.
Diversification:
By offering automatic diversification, flexi-cap mutual funds reduce the risk of focusing on assets of single-market capitalisation. Having a well-diversified portfolio simply reduces the risk.
Long-Term Growth Potential:
Flexi-cap mutual funds have the potential for long-term growth as they manage market volatility and are exposed to diversified market caps, so these funds are excellent choices for long-term-oriented investors.
How Do Flexi Cap Mutual Funds Work?
With a diversified investment portfolio across multiple market capitalizations of large-cap, mid-cap, and small-cap, Flexi Cap Mutual Funds aims to offer long-term growth potential. The fund manager allocates the assets flexibly by considering the company fundamentals, economic conditions, and market trends to optimise the returns of investment. Here you can follow to know how Flexi Cap Mutual Funds works:
Active Asset Allocation:
The fund managers actively monitor the market trends and economic data to allot assets. To achieve the potential growth in the portfolio, fund managers may add more small-cap or mid-cap. In cases of market volatility, fund managers can add large-cap funds to provide stability in the portfolio.
Stock Selection:
To choose the right funds from various sectors and industries, the fund managers perform in-depth research and analysis. However, the funds offer flexibility by allocating to various sectors and market caps.
Balanced Risk and Reward:
While mid- and small-cap stocks in the portfolio present opportunities for higher returns, albeit with greater volatility, large-cap stocks offer stability and lower risk. This well-rounded strategy aims to provide a risk-reward trade-off that appeals to a broad spectrum of investors.
Benefits of Flexi Cap Mutual Funds
Flexibility in Stock Selection:
The main benefit of Flexi Cap funds is the flexibility they offer the fund manager. This allows them to take advantage of opportunities in various market segments based on the market’s state.
Dynamic Risk Management:
Flexi-cap funds can modify their risk profile in response to market fluctuations. For instance, during market turbulence, the fund may increase exposure to large-cap stocks, which are generally less volatile.
Diversification:
Flexi Cap funds provide industry and sector diversification and market cap diversification. It reduces the risk possibilities of a single industry or sector that can impact your whole portfolio.
Potential for High Returns:
By investing in mid-cap and small-cap fund companies, the flexi-cap funds offer high growth, which can yield higher returns. As the Flexi cap fund is not limited to any particular sector, it increases the potential for higher returns and boosts your investment.
Long-Term Capital Appreciation:
Investors who have a risk tolerance from moderate to high can invest in flexi-cap mutual funds in the long term by allocating in large-cap mutual funds to achieve the blend of stability and in mid-cap and small-cap funds. Having a long-term growth potential can give you assurance and confidence in investment.
Who Should Invest in Flexi Cap Mutual Funds?
These investors would greatly benefit from Flexi Cap funds:
Seek Diversified Equity Exposure:
Investors seek exposure to considerations, sectors, and industry-various Flexi Cap funds.
Have a Long-Term Horizon:
The FlexiCap mutual fund offers capital appreciation if kept for long-term goals. These funds are ideal for investors with an investment horizon of 5-7 years or more.
Are Willing to Accept Moderate to High Risk:
Since the flexi cap fund invests in the equity market, they are volatile in nature. If the investors are willing to take moderate to high risk and have a long-term investment horizon, they are the best option.
Prefer Professional Management:
Flexi Cap funds’ flexible asset allocation approach is advantageous for investors who would instead delegate asset allocation decisions to a knowledgeable fund manager. Having a professional fund manager take care of your investment gives you a sense of confidence, trust, and security in your investment choice.
Taxation on Flexi Cap Mutual Funds
Flexi Cap mutual funds are regarded as equity funds for taxation purposes in India. Here’s the taxation as follows:
- Short-Term Capital Gains (STCG): if you redeem flexi-cap mutual funds within the year, then a 15% tax is applied on the returns gains.
- Long-Term Capital Gains (LTCG): if you hold flexi-cap mutual funds for more than a year and then redeem it, the gain exceeds ₹1 lakh in a financial year, then it comes under 10% of tax.
How to Choose a Flexi Cap Mutual Fund
When choosing a Flexi Cap fund, take into account the following aspects:
Fund Performance:
Examine the fund’s performance over the last one, three, and five years. Compare its performance to other funds in the same category and its benchmark.
Expense Ratio:
The expense ratio is the cost of the fund management to manage your investment portfolio. It is advised to look for lower expense ratios, as they can affect less on your investment returns.
Fund Manager’s Track Record:
Investing in flexi cap mutual funds and their performance can be significantly influenced by the experience and track record of the fund manager. Investors should consider a fund manager with expertise who could have an excellent track record.
Risk-Adjusted Returns:
Analyze the fund’s risk-adjusted returns using measures like the Sharpe ratio, which shows how much return the fund produces for the risk taken.
Investment Horizon:
Match the fund’s investment strategy to your time horizon and financial objectives. Long-term investments are typically better suited for flexi-cap funds.
Conclusion
With Flexi Cap Mutual Funds, investors get the flexibility and diversification of funds in equity investing. Investors who are in search of growth and stability get exposure to large-cap, mid-cap, and small-cap, which sound appealing to them. Even though, like any other equity fund, it also carries some risk but it gives a substantial capital appreciation when it is kept for the long term. The FlexiCap mutual fund is a valuable investment in your portfolio that will balance your risk and returns.
It is the best option for investors who are looking for funds that can shift according to market trends and give a balanced portfolio with the potential for higher returns. Also, do careful research while making investments.
Moreover, investors can contact us at 9810325138 if they want to learn more and create a future with financial freedom.
Frequently Asked Questions
Flexi-cap funds are a great option for investors seeking diversified equity exposure over the long term and with a risk tolerance ranging from moderate to high.
Just like every other fund, flexi-cap mutual funds are also risky. On the bright side, the fleece cap funds offer a balanced approach to risk and returns. As large caps offer stability and mid and small caps offer growth when the market is volatile.
Flexi Cap mutual funds work best when they are kept for the long term; they offer a balance of stability and growth potential. If investors keep the funds for at least 5-7 years or more, it can generate capital appreciation.
To choose the right Flexi Cap fund, look at certain things, such as the expense ratio, returns adjusted for risks, the track record of the fund manager, and past performance of the fund. Also, the investment strategy should match your financial objectives and risk tolerance.
Yes, you can invest in Flexi Cap funds through SIP. Through SIP, you can invest a specified amount regularly in Flexi Cap and over some time you can accumulate wealth with the power of compounding.
In flexi-cap mutual funds, investors can start investing as low as ₹500 in SIP investment. There can be a minimum of ₹5,000 in lump sum.