InvestorQ : Can we say that flexi-cap funds are riskier bets among mutual funds?
sarah Leo made post

Can we say that flexi-cap funds are riskier bets among mutual funds?

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Rashi Mehra answered.
4 months ago
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If you take the traditional risk-reward approach, then flexi-caps are riskier than large cap funds but safer than mid-cap and small cap funds. However, investors also compared these flexi-caps with the new rules governing multi-caps which takes away the discretion to the fund manager allocation. Flexi caps do not have such allocation restrictions.

Let us look at some flexi-cap risk measures. Sharpe and Treynor ratios of flexi cap funds are positive, indicating long-term favourable risk-adjusted basis. Flexi cap funds have an average covariance of 86%, leaving a lot of room for index-delinked returns. It is this promise, of flexibility and alpha that is making flexi-cap funds attractive. After all, the biggest risk in investing is not taking on adequate risk.

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