SIPs in flexi cap funds: How can it help regular investors?

In the world of investments, regular investors often seek a strategy that combines simplicity and flexibility. This is where starting an SIP in flexi cap funds can be of great assistance. This powerful combination caters to the need of those looking for a straightforward yet dynamic approach to wealth creation. Let's understand how SIP in flexi cap funds work and why it is so beneficial for mass market investors.

• Table of contents

1. What are flexi cap funds?
2. Why do flexi cap funds suit SIPs?
3. Ideal for goal-based investing

What are flexi cap funds?

Flexi cap funds, as the name suggests, are one of the most flexible type of equity mutual funds. They have the liberty to dynamically shift between large, mid, and small cap stocks depending on market opportunities. This flexible mandate allows fund managers to capitalise on opportunities across the market cap spectrum.

Flexi cap funds are not constrained by any market cap bias and can invest a minimum of 65% of their corpus in equity. This provides them with a wider investment universe compared to other categories. Their flexibility enables them to adapt to changing market conditions and position their portfolio accordingly to generate optimal risk-adjusted returns over the long run.

Why do flexi cap funds suit SIPs?

The dynamic nature and wide investment domain of flexi cap funds make them a good fit for investors using the SIP route. Some key reasons why the SIP and flexi cap fund investment combination is highly beneficial are below.

Flexibility to adapt: Flexi cap funds can navigate market cycles better by shifting focus between segments. This powers their ability to generate alpha.

Diversification: Investing in Bajaj Finserv Flexi Cap Fund through SIP allows you to diversify your investments across various sectors and market caps. By spreading investments across sectors, Bajaj Finserv Flexi Cap Fund can help mitigate risks associated with the performance of specific industries or companies.

Rupee cost averaging: SIPs enable you to buy more units when prices are lower and fewer units when prices are higher. This helps in averaging out the cost over time and reducing the impact of market fluctuations.

Potential for better returns: Investing through SIP allows you to benefit from the power of compounding and rupee cost averaging, potentially leading to relatively better returns over a prolonged investment horizon.

Ease of regular investing: SIPs provide a disciplined approach to investing, allowing you to invest a fixed amount regularly. This automates the investment process and promotes a systematic savings habit.

Long term wealth creator: By making the most of opportunities regardless of market cap or segment, flexi cap funds aim to deliver superior risk-adjusted returns on a sustainable basis. This compounds wealth over the years through the SIP mode.

By investing in flexi cap funds through SIP, investors can benefit from the advantages of flexi cap investing along with the discipline and wealth creation potential of the SIP mode. This makes it a compelling investment proposition.

Ideal for goal-based investing

Besides wealth creation, flexi cap fund SIPs also prove highly useful for the goal-based long-term investing needs of regular households.

• Children's education: An SIP started 12-15 years in advance can generate a sizable corpus for college/higher education expenses.
• Wedding expenses: Investing for 8-10 years through SIPs can help accumulate funds for wedding expenses.
• Retirement: Starting SIPs in one's 30s with a 15-20 year horizon makes flexi cap funds suitable for building a retirement corpus.

By remaining invested through market ups and downs, flexi cap SIPs can help realise various long term life goals in a tax-efficient manner. Their ability to deliver inflation-beating returns over long term boosts overall goal achievement potential.

Conclusion

The SIP and flexi cap fund investment combination gives retail investors an extremely powerful wealth creation tool. By making the most of opportunities across market caps, flexi cap funds optimise the long-term return potential through various market cycles. Backed by rupee cost averaging and discipline of SIPs, they emerge as one of the ideal investment propositions for regular investors to build a sizeable corpus over 15-20 years. You can consider investing in the Bajaj Finserv Flexi Cap Fund through SIP to gain exposure across large, mid, and small caps, and maximise the long term wealth creation potential. Visit the scheme page for scheme information.

When planning your investments, you can take the help of an SIP calculator to asses the return potential of your SIPs. The calculator takes into account your instalment amount, duration and expected returns to give you an idea of what your final corpus size can potentially be.

FAQs:

Is SIP the only way to invest in flexi cap funds?

No, while SIPs provide multiple benefits, one can also invest lumpsum amounts in flexi cap funds. However, SIP mode is preferable as it helps mitigate volatility and takes advantage of rupee cost averaging.

How do I choose a good flexi cap fund for SIP?

Look at long term track record, corpus size, consistency of returns over market cycles, fund manager’s experience and stability. Also check past portfolio allocations to evaluate flexibility. Low expense ratio is another important factor.

What is the minimum amount I need to start a flexi cap fund SIP?

Most flexi cap funds have a minimum SIP amount of just Rs. 500 per month. This makes flexi cap SIPs very accessible for retail investors looking to start with small amounts and increase systematically over time. One way to gradually increase your investments over time is with a step up SIP. With this facility, your SIP amount is automatically increased by a fixed percentage at regular intervals. Using a step up calculator, you can plan these increments effectively by visualising the growth potential of different SIP amounts and step up rates.

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.