Why investors should add flexi cap funds to their portfolio

Being agile is the key to financial success. Flexi cap funds have this quality to offer investors a dynamic investment product that can adjust itself depending on market conditions. While new investors may struggle to create a well-rounded portfolio, flexi cap funds come with built-in diversification. It is no surprise, therefore, that flexi cap mutual funds have become one of the largest equity investment categories in India.

But before we shed light on why you should add a flexi cap fund to your investment portfolio, let’s first discuss what flexi cap funds are.

• Table of contents

1. What is a flexi cap fund?
2. Are flexi cap funds and multi cap funds different?
3. Why investors should add flexi cap funds to their portfolio
4. Who should invest in flexi cap funds?
5. Are flexi cap funds stable?
6. Bajaj Finserv Flexi Cap Fund

What is a flexi cap fund?

A mutual fund scheme that invests across market cap segments – viz. large-cap, mid-cap, and small-cap companies – in various industry sectors is called a flexi cap fund. The only mandate for a mutual fund to be called a flexi cap fund, according to the Securities and Exchange Board of India (SEBI), is that it must hold at least 65% of its assets in Indian equities. Flexi cap fund managers are always on the lookout for newer opportunities as they arise in the market.

Are flexi cap funds and multi cap funds different?

Many people confuse flexi cap funds with multi cap funds. While both are equity funds that invest in large-cap, mid-cap, and small-cap companies, they are very different in terms of their risk level and ability to generate returns.

Flexi cap funds give the fund manager the freedom to invest in companies of all market caps across industry sectors with no minimum asset allocation requirements. However, multi cap funds are more restrictive, and the fund manager must maintain at least 25% investment in each of the three market caps.

Why investors should add flexi cap funds to their portfolio

Here are 3 main reasons why you should add flexi cap funds to your investment portfolio:

Flexibility: The fund manager of a flexi cap fund has the freedom to switch investments across different market caps. Thus, these funds can adapt to changing market conditions to provide potential growth advantage to investors.

Potential to get long term returns: Since they can allocate assets based on growth opportunities, you stand an opportunity to generate wealth and meet your long-term financial goals when you invest in flexi cap funds.

Easy to diversify portfolio: If your financial advisor gives a green signal, then you should consider adding a flexi cap fund to your investment portfolio as soon as possible.

Who should invest in flexi cap funds?

You should consider investing in flexi cap funds if:

• You are willing to take a relatively higher level of risk.
• You have a long investment horizon of at least 5 years.
• You want to create wealth.
• You want to start a Systematic Investment Plan (SIP) in a long-term equity investment.
• You want to meet your long-term financial goals like retirement planning, funding your child’s education, etc.
• You want to invest a lump sum in Indian equities for a long investment horizon.

Are flexi cap funds stable?

Flexi cap funds come with a higher level of risk than equity funds like large-cap funds. The reason is that they invest in companies offering high-growth opportunities, which inherently carry a higher level of risk as compared to established blue-chip.

Flexi cap funds are a ‘high risk, high return’ investment option that most investors can consider adding to their portfolio. Flexi cap funds also invest in fast-growing companies in up-and-coming industries to give you potentially reasonable returns on your investment. The key is to go into it for the long haul and get better risk-adjusted returns instead of worrying about short-term market movements. You can use flexi cap funds to plan your retirement, build wealth or meet other long-term financial goals.

Bajaj Finserv Flexi Cap Fund

The Bajaj Finserv Flexi Cap Fund focuses on long-term trends to offer a flexible investment approach and a diverse portfolio. If you're looking to embark on your investment journey with a fund that thinks differently and aims to provide relatively better growth potential, the Bajaj Finserv Flexi Cap Fund could be the good choice for you.

FAQs:

What are flexi cap funds, and how do they differ from other equity funds?

Flexi cap funds have the flexibility to invest across market capitalizations, providing diversification and adaptability.

What are the potential benefits of adding flexi cap funds to my portfolio?

Flexi cap funds can capture opportunities across market segments, helping to generate long term returns.

How do flexi cap funds adapt to changing market conditions?

They adjust their asset allocation based on market dynamics, reducing exposure to overvalued segments, and increasing exposure to undervalued ones

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 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.