InvestorQ : What are Flexicap mutual funds?
Dia Deshpande made post

What are Flexicap mutual funds?

Ria Jain answered.
1 year ago

Last year, the Securities and Exchange Board of India (SEBI) introduced the ‘Flexi-cap’ category to provide increased flexibility to mutual funds. That move was aimed at helping asset managers after changes in allocations reduced flexibility for multicap schemes. Flexicap funds are required to invest at least 65% in equities across market capitalization without any restriction, giving fund managers more leeway.

A Flexi-cap fund allows investors to diversify their investment portfolio across companies of different market capitalization, mitigating risk and lowering volatility. They are also referred to as diversified equity funds or multi-cap funds. These funds are much more balanced in terms of their allocation across market cap buckets—large caps, mid-caps, and small caps — and they're right in the middle order in terms of risk and reward which they offer for the investors.

A Flexi-cap fund can provide the fund manager with greater investment choices and diversification possibilities. These funds also have the scope to deliver steady returns even during times of a bear market phase. Market capitalization plays a determinant role when choosing the companies to invest in mutual fund houses. Not only does market capitalization show the size of a given company but also other various characteristics which investors look into, such as the track record, growth potential, and the risk inherent to these companies.