Flexi Cap Funds

WHAT ARE FLEXI-CAP FUNDS?

Flexi-cap funds give fund managers the freedom to invest across the market spectrum—large, mid, or small-cap stocks —without the rigid allocation rules of other categories. The only mandate is that at least 65% of the portfolio must stay in equities and equity related instruments. This flexibility allows the fund manager to chase opportunities wherever they see value, with the liberty to pick a benchmark that best reflects the scheme’s strategy.

HOW ARE FLEXI-CAP FUNDS DIFFERENT FROM OTHER EQUITY CATEGORIES, INCLUDING MULTI-CAP FUNDS?
Unlike large-, mid- and small-cap funds that are bound by strict allocation rules, flexi-cap funds give managers the leeway to invest across the entire market without restrictions. Multi-cap funds may look similar, but they too have a fixed mandate: they must allocate at least 25% each to large, mid and small caps. Large-cap funds must invest at least 80% in the top 100 companies by market value, while mid-cap funds are required to put 65% into firms ranked 101–250 and small-cap funds 65% into those ranked 251 and below. In comparison, flexi-cap funds face no such constraints, allowing managers to move across large-caps, mid-caps and small-caps depending on the market conditions. This flexibility is what has made them popular among investors.

WHO SHOULD INVEST IN FLEXI-CAP FUNDS?
Flexi-cap funds are suited for long-term equity investors or first-timers with a moderate risk appetite who want exposure to Indian equities without the hassle of picking individual stocks. They work well as a core portfolio holding for those seeking just one diversified fund where the manager decides the mix across large-, mid- and small-caps to balance risk and volatility. Investors planning to build wealth steadily through systematic investment plans (SIPs) can also consider this category.