If flexibility is an asset, why not Flexi-cap?

For a multi-cap fund, the fund manager has to invest minimum 25% each in large, mid, small cap companies.

Jul 06, 2021 02:07 IST India Infoline News Service

Flexible is defined as the ability to bend without breaking. Dancers, gymnast or Yoga guru’s come to mind when speaking of flexibility. However, in term of your mutual fund portfolio, how flexible is it?

Mutual funds are a common pool of investment by investors, which is managed by a fund manager. The fund manager backed by research team, creates a portfolio guided by mandate to invest in large-caps, midcaps, small caps or a mix of three. However, a large-cap mutual fund has to invest minimum 80% in large companies, a midcap fund has to invest minimum 65% in mid-size companies and similarly small cap fund has to invest minimum 65% in small companies.  For a multi-cap fund, the fund manager has to invest minimum 25% each in large, mid, small cap companies.

Thus rule based investing may result in situations where the fund manager is unable to take a large exposure in case the opportunities lies therein.
Returns
Year S&P BSE LargeCap S&P BSE MidCap S&P BSE SmallCap
2010 16.5% 16.1% 15.7%
2011 -25.0% -34.2% -42.6%
2012 27.4% 38.5% 33.0%
2013 6.4% -5.7% -11.2%
2014 31.3% 54.7% 69.2%
2015 -4.0% 7.4% 6.8%
2016 3.3% 8.0% 1.8%
2017 29.8% 48.1% 59.6%
2018 2.2% -13.4% -23.5%
2019 10.9% -3.0% -6.8%
2020 14.7% 19.9% 32.1%
2021 13.4% 25.4% 41.3%
Source: BSE, IIFL Research; Data as of 2July2021.

The above table illustrates that no single segment does well consistently, hence having the flexibility to build a portfolio as per situation is a key advantage. A flexi cap fund may invest any percentage i.e. 0-100% in large / mid / small cap. This flexibility provides the fund manager the leeway to maximize on the prevailing market opportunities and build wealth for investors.

Mutual funds from the flexi-cap segment curated for you.
Flexi Cap
Returns(%) Asset Allocation
Scheme Name NAV AUM((₹cr) 1Y 3Y 5Y Large Mid Small Debt Recommended Horizon Action
Aditya Birla SL Flexi Cap Fund(G) 1,048.7 14144 63.5 14.6 15.7 62.3 24.1 8.8 4.8 5+ Years Click to invest
HDFC Flexi Cap Fund(G) 886.8 25232 66.0 14.4 14.0 78.8 9.8 8.7 2.7 5+ Years Click to invest
UTI Flexi Cap Fund(G) 231.6 18405 69.6 18.7 17.3 60.87 34.41 4.7 - 5+ Years Click to invest
ICICI Pru Flexi Cap NFO 10 - - - - - - - - 5+ Years Click to invest

 NAV & Returns: As of 30 June 2021 ; eg. If Rs.10,000 is invested and NAV is 1000/- you receive 10 units
Flexi Cap
  A lump-sum investment of
Rs. 10000 would have grown to
Scheme Name NAV AUM((₹cr) 1Y 3Y 5Y Recommended Horizon Action
Aditya Birla SL Flexi Cap Fund(G) 1,048.7 14144 16,351 15,040 20,709 5+ Years Click to invest
HDFC Flexi Cap Fund(G) 886.8 25232 16,601 14,982 19,266 5+ Years Click to invest
UTI Flexi Cap Fund(G) 231.6 18405 16,958 16,707 22,207 5+ Years Click to invest
ICICI Pru Flexi Cap NFO 10 - - - 5+ Years Click to invest

A monthly SIP of Rs.1000 – would result in wealth creation. It’s always a good time to start a SIP
Source: IIFL Research, SIP tenure 10yrs As of 30 June 2021
Is Flexi-cap fund suitable to you?

A flexi cap fund will be suitable to you if you require your fund manager to be agile and make appropriate investments across market cap without limitations.

Style: It is an aggressive strategy compared to multi-cap funds.

Taxation: Flexi-cap funds are equity oriented funds, hence short term capital gains are taxed at 15% while long term capital gains after 1 year, for gains above 1 Lakh, at a rate of 10% without indexation.

Liquidity: Withdraw anytime you like. If you redeem (sell) on Monday, you receive the money on Thursday (T+3). You can sell in parts as well.

Minimum Amount: Start a SIP for as low as Rs.500. Lump-sum at Rs. 5,000

Time Horizon: It is best suited if you have a time horizon of at least 5 years+. However, there is no lock-in, so invest anytime, exit anytime.

You will receive funds as per the prevailing market value.

How to invest: Click here.

SIP or Lump-sum: In lump-sum investment, market timing plays a role in the short run, however if invested for long periods (5yrs+), both options are good. SIP helps you average your per unit cost.

Can I stop SIP: Yes, at any time. But remember SIP is a Good EMI, so longer the investment more is the wealth created.

To conclude, Flexi-cap funds offer your fund manager the flexibility to adapt to market conditions and investment in appropriate companies.

Hence he can wear a sweater when cold, hold an umbrella when it rains and wear a shirt when warm, not forced to do all three, he has a choice.   

To invest in MF click

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