Flexi Cap Fund: The Ultimate Flexible Investment Option

Flexi Cap Fund: The Ultimate Flexible Investment Option
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Are you looking for a mutual fund that offers you the flexibility to invest across different market capitalizations and sectors? Look no further than the Flexi Cap Fund! 

These funds have been gaining popularity as an investment option due to their flexibility and diversification. As the name suggests. this versatile fund provides investors with the benefits of diversification, active fund management, and the potential for higher returns while also minimizing risks. 

In this blog, we’ll dive deep into the features, benefits, and factors to consider before investing in Flexi Cap Funds. Moreover, we will also highlight the popular flexi cap funds wherein you can invest in 2023. 

What is a Flexi Cap Fund?

A Flexi Cap Fund is a type of mutual fund that invests in stocks across different market capitalizations. It gives the fund manager the flexibility to invest in companies of any market capitalization, i.e., large-cap, mid-cap, or small-cap, depending on the prevailing market conditions. 

The fund’s objective is to provide capital appreciation to investors over the long term by investing in a diversified portfolio of stocks. Flexi Cap Funds are suitable for investors who seek higher returns than large-cap funds and lower risk than mid-cap and small-cap funds. The flexibility to invest in different sectors and market capitalizations provides diversification benefits to investors.

Types of Flexi Cap Funds

There are two types of flexi cap funds based on their investment style:

  • Active Flexi Cap Funds: These funds are managed by experienced fund managers who actively manage the fund’s portfolio by selecting stocks based on their performance, growth potential, and valuation.
  • Passive Flexi Cap Funds: These funds invest in stocks that are part of a benchmark index, such as the Nifty 500 or BSE 500, and follow a passive investment strategy. These funds aim to replicate the performance of the benchmark index and have lower expense ratios compared to active funds.

Features of a Flexi Cap Fund

Flexi Cap Mutual Fund offers investors the flexibility to invest in companies across different market capitalizations and sectors. Some significant features of flexicap funds are as follows:

  • Diversification: Flexi Cap funds invest in companies across market capitalizations and sectors, thus providing diversification to the investor’s portfolio.
  • Flexibility: Flexi Cap funds have the flexibility to invest in companies across market capitalizations and sectors, allowing the fund manager to take advantage of opportunities across the market.
  • Investment in different sectors: Flexi Cap funds invest in companies across different sectors, thus allowing investors to gain exposure to a broad range of industries.

Popular Flexi Cap Funds in India 

Popular Flexicap Funds in IndiaAUM 
Parag Parikh Flexi Cap Fund – Direct-Growth₹31,290 Crores
Quant Flexicap Fund Growth Option Direct Plan₹1,334 Crores
HDFC Flexi Cap Fund – Direct Plan – Growth Option₹31,893 Crores
PGIM India Flexi Cap Fund₹5,457 Crores
Edelweiss Flexicap Fund Growth₹1,074 Crores
Canara Robeco Flexicap Fund₹8,713 Crores
Navi Flexicap Fund₹208 Crores
Kotak Flexicap Fund₹37,217 Crores
SBI Flexicap Fund Growth₹15,693 Crores
DSP Flexicap Fund₹7,572 Crores

How to Invest in a Flexi Cap Fund?

Flexi Cap Funds have become increasingly popular among investors due to their ability to invest in a diversified portfolio of stocks across market capitalizations. Investors can invest in Flexi Cap Funds through various methods:

Direct Investment

Investors can invest in Flexi Cap Funds directly by visiting the website of the fund house and following the steps for investment. This method allows investors to invest in the fund without the need for intermediaries.

Through Brokers

Investors can also invest in Flexi Cap Funds through brokers or financial advisors who provide investment advice and guidance. Brokers charge a commission or fee for their services.

Through Online Investment Platforms

Several online investment platforms offer the facility to invest in Flexi Cap Funds. These platforms provide a user-friendly interface and allow investors to invest in the fund of their choice with just a few clicks. They also offer features such as portfolio tracking, research reports, and expert recommendations. These platforms charge a fee for their services.

Benefits of Investing in a Flexi Cap Fund

Flexi Cap Funds offer several benefits to investors, including:

Higher Returns

Flexi Cap Funds invest in a mix of large, mid and small-cap stocks, providing a diversified portfolio that can potentially generate higher returns than other funds that are restricted to specific market segments.

Lower Risk

The diversification offered by Flexi Cap Funds helps reduce the risk of investment losses as compared to single-segment funds such as Small Cap Funds or Mid Cap Funds. Additionally, the fund manager has the flexibility to shift the portfolio allocation depending on market conditions, which helps to reduce overall investment risk.

Active Fund Management

Flexi Cap Funds are actively managed by a professional fund manager who uses his expertise to select the best stocks and adjust the portfolio as per the market conditions. The fund manager regularly monitors the market trends and adjusts the fund’s asset allocation to ensure that it remains aligned with the investment objectives of the fund. This active fund management helps to generate better returns and mitigate risks.

Factors to Consider Before Investing in Flexi Cap Funds

Before investing in Flexi Cap Mutual Fund, there are certain factors that one should consider, which include:

  • Fund Manager: The fund manager plays a crucial role in the performance of the fund. It is important to research the fund manager’s track record and experience in managing Flexi Cap Funds or similar funds.
  • Investment Objective: It is important to understand the investment objective of the Flexi Cap Mutual Fund and whether it aligns with your investment goals. Some Flexi Cap Funds may focus on generating long-term capital appreciation, while others may aim to generate regular income.
  • Expense Ratio: The expense ratio is the annual fee charged by the mutual fund for managing investments. Hence, it is important to compare the expense ratio of different Flexi Cap Funds and choose the one that offers a lower expense ratio without compromising on the quality.
  • Market Capitalization Bias: Flexi Cap Funds can have varying degrees of exposure to large, mid, and small-cap stocks. Therefore, It is important to understand the market capitalization bias of the fund and ensure it aligns with your investment objectives and risk profile.

Flexi Cap Fund vs Other Funds

Large Cap Funds vs Flexi Cap Fund 

Large Cap Funds invest primarily in companies with large market capitalization. They aim to provide stability to the portfolio with lower risk and potentially moderate returns. On the other hand, Flexi Cap Funds can invest in companies across market capitalization categories and aim to generate better returns than Large Cap Funds.

Mid-Cap Funds vs Flexi Cap Fund

Mid-Cap Funds invest in companies with medium market capitalization, providing a balance between stability and growth potential. In comparison, Flexi Cap Funds may have exposure to mid-cap stocks but can also invest in large cap stocks and smallcap stocks, depending on the market conditions.

Small Cap Funds vs Flexicap Funds

Small Cap Funds invest in companies with small market capitalization and have a higher risk-return profile. Flexi Cap Funds may also invest in small-cap stocks but can provide more diversification by investing in large cap stocks and mid cap stocks as well.

Multi-Cap Funds vs Flexi Cap Funds

Multicap Funds invest in companies across market capitalization categories, similar to Flexi Cap Funds. However, Flexi Cap Funds have more flexibility as they are not required to invest a minimum percentage of their assets in any specific market capitalization category.

Taxation on Flexi Cap Funds

The taxation on flexi cap funds is similar to that of other equity mutual funds in India. Short-term capital gains (investments held for less than 1 year) are taxed at a rate of 15%, while long-term capital gains (investments held for more than 1 year) exceeding INR 1 lakh in a financial year are taxed at a rate of 10% without indexation benefit.

However, if long-term capital gains exceed INR 1 lakh and an indexation benefit is applied, the tax rate is 20%. Additionally, a surcharge of 10% is applicable if the total income exceeds INR 50 lakh but is less than INR 1 crore, and 15% if the total income exceeds INR 1 crore. A health and education cess of 4% is also applicable on the tax amount.

To Wrap It Up

In conclusion, flexi cap funds are an excellent option for investors looking for a dynamic investment option that can provide higher returns while keeping the risk at a minimum. With the freedom to invest in various sectors and asset classes, these funds offer diversification and flexibility. 

However, the choice of the fund manager, investment objective, and expense ratio should be carefully considered before investing in flexi-cap funds. 

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