SEBI introduced Flexicap Fund on November 6, 2020. These are open-ended dynamic equity schemes that invest across small-cap, mid-cap and large-cap funds. But at least 65% of the fund must consist of equity and equity-related instruments. It can ensure risk-adjusted returns and provide a dual advantage of growth and value along with diversification. So, investors can use flexicap funds to curb risk and volatility.
Fund managers have the freedom to assess the potential to assess different firms regardless of their size and invest money across different segments and companies. They tend to offer speedy returns even during a bear market phase in times of bad performance. Below are a few benefits of investing in the best flexi cap fund.
These tend to strike the right balance between risks and returns. It is ideal for anyone with a moderate risk appetite with an investment horizon of more than 5 years. The fund can drop its mid-cap and small-cap allocations to zero depending on the market phases to keep volatility under control. It is a perfect choice if you wish to build a fund over a long period. Flexi cap funds usually invest in best-performing firms that are leaders in their fields that follow strong balance sheets and robust business models. So, the returns are risk-protected.
A flexi cap mutual fund is represented by the Nifty 500 index which has mostly delivered a balanced performance between large, mid and small-cap funds. It is perfectly suited for investors looking to invest in large-cap oriented funds with tactical allocation to small-cap and mid-cap stocks for portfolio growth. It adjusts asset allocations based on different market conditions and tweaks investment in securities depending on market movement.
A flexi cap fund is an all-season product and offers a well-diversified portfolio. Investors are allowed to diversify across different companies of different market capitalisation which helps lower volatility and reduce risks. A fund manager can opportunistically shift allocations between small, mid and large caps. A properly diversified equity strategy comes with a flexible ‘go anywhere’ approach. It means this fund is able to increase exposure to multiple styles, sectors and themes.
The Indian equity markets have sharply bounced back with a healthy GDP growth rate of 8.4% in the second quarter of 2021-22. But the 4th wave scare still lingers along with risks of rising inflation. This can keep the market volatile in the coming days. But the good news is that a flexi cap fund has a dynamic nature. So, it can help investors sail through the market rides and stay secure during rapid movements.
In short, a flexi fund is a great choice if you wish to invest across different market segments. There are no limits or biases towards any sector. The high-end flexibility allows fund managers to pick the most lucrative opportunities during both good and bad market conditions. You can always change portfolios regardless of the size of the companies you are investing in. Learn flex cap fund meaning, benefits and features beforehand for an informed choice.