Flexi cap funds: A suitable fit for every investment season

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When it comes to mutual fund schemes like large-cap funds, mid-cap funds, and small-cap, they either offer relative stability or aggressive growth potential. Also, these schemes are restricted to undertake significant investments to just one category of capitalisation, which prevents them from taking advantage of an opportunity arising in other categories. Thankfully, there are other options, such as flexi-cap funds, available to investors.

  • Table of contents
  1. What are flexi cap funds?
  2. Are flexi cap funds and multi cap funds same?
  3. Who should invest in flexi cap funds?
  4. Features of flexi cap funds
  5. Why should you invest in Bajaj Finserv Flexi Cap Fund?
  6. FAQ

What are flexi cap funds?

Mutual funds that invest at least 65% of their total assets in equity and equity-related securities of companies of varying market capitalisation are called flexi cap funds. The best part is that fund managers can flexibly invest in large-cap, mid-cap, and small-cap companies. They can buy and sell the underlying securities based on the performance and upcoming opportunities in different companies irrespective of their market capitalisation.

Are flexi cap funds and multi cap funds same?

Many people confuse flexi cap funds with multi cap funds. However, they are different mutual fund products suitable for different types of investors. Multi-cap funds are required to invest at least 75% of their total assets in equity and equity-related securities with a minimum asset allocation of 25% each for large-cap, mid-cap, and small-cap companies.
Flexi cap funds are required to invest at least 65% of their total assets in equity and equity-related securities with no minimum limit for asset allocation to different market cap categories.
Thus, if you compare both, flexi-cap funds are more ‘flexible’ since the fund manager can buy and sell assets without any market cap restrictions. .

Who should invest in flexi cap funds?

You should consider making a flexi cap fund investment if:

  • You have a relatively high-risk appetite.
  • You want to create wealth by investing in long-term trends.
  • You want to meet your long-term financial goals.
  • You do not worry about market volatility in the short term and can stay invested for the long haul. .

Features of flexi cap funds

You should invest in flexi cap funds only after considering these factors:

  • High risk: Flexi cap funds fall in the ‘very high risk’ investment category since they invest in firms from different industries based on their growth potential irrespective of their market cap. However, keep in mind that staying in the long term can help you achieve significant potential.
  • Return potential: Mutual funds bearing a high risk usually have the potential to generate relatively better return potential. If you have a high risk appetite and are willing to invest in the long term, you may get an opportunity to create wealth, as not many investment products match the growth potential of flexi cap funds.
  • Diversified portfolio: If you want a diversified portfolio, a flexi cap fund helps you to do so in one go. Just think about it, your money will be invested in companies with high growth potential in equity and debt instruments. Depending on the investment strategy, the Asset Management Company (AMC) may also invest in upcoming industry sectors
  • Longer investment horizon: While you can pay the exit load and sell your units based on the holding of the mutual fund, it is advisable to stay invested for more than 3 years. The first reason is that you stand a chance to get relatively better risk-adjusted returns in the long term. The other reason is that you will be taxed in the Long-Term Capital Gains (LTCG) category which will help you keep more money generated from your mutual fund investment as compared to short term capital gain impact on your investments.

Why should you invest in Bajaj Finserv Flexi Cap Fund?

Bajaj Finserv Flexi Cap Fund can provide long term growth potential by investing in large-cap, mid-cap, small-cap companies across various sectors. This scheme offers a ‘high risk, high return’ investment option to investors who want to generate wealth by investing in megatrends. There is no exit load if the units are redeemed after 6 months.
You can invest in Bajaj Finserv Flexi Cap Fund with as little as Rs. 500 and in multiples of Re 1 thereafter. You can also set up a Systematic Investment Plan (SIP) with Rs. 500 to Rs. 1,000 with minimum 60 instalments, or SIP of more than Rs. 1,000 with minimum 6 instalments. It is always advisable to consult a financial expert before making any investment decisions

Conclusion:
Flexi cap funds are a ‘high risk, high return’ investment option that invest in companies across various industries irrespective of their market capitalisation. The low entry barrier makes it easy for cautious investors to test the waters before taking the plunge. In short, a flexi cap fund investment is potentially one of the ways to create wealth or build a retirement corpus with mutual funds.

FAQs:

What are the advantages of investing in a flexi cap fund compared to other equity funds?

Flexi cap funds provide a balance between the relative stability of large-cap stocks and the growth potential of mid and small-cap stocks. This diversified approach can offer better risk-adjusted returns over the long term.

How do I determine if a flexi cap fund aligns with my investment goals?

Assess your risk tolerance, investment horizon, and financial objectives. If you seek a well-diversified equity investment with the potential for long term growth, and are comfortable with market fluctuations, a flexi cap fund might be a suitable fit for your investment strategy.

Are there any risks associated with flexi cap funds?

Like all equity investments, flexi cap funds carry market-related risks. Fluctuations in stock prices and changes in market conditions can impact the fund's performance. Investors should be prepared for short-term volatility while focusing on long-term investment goals.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views / opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.