A report of the wealth management arm of brokerage Prabhudas Lilladher has mentioned that more than 60% of the equity mutual fund outperformed their respective benchmarks in the month of December 2024. The report also found that Flexi Cap Funds led the entire pack and 79.49% of schemes outperformed the benchmarks which they follow. The study was based on as many as 291 open-ended equity diversified funds.
This automatically leads to the questions what are flexi cap funds? How are they different from other equity-oriented funds? What sort of returns have they provided in December 2024 and which class of investors are they suitable for.
What is a Flexi Cap Fund
A Flexi Cap fund is a type of equity-oriented fund. In a sense, a flexi cap fund offers a great opportunity to diversify investments through a single investment. This is possible since flexi cap mutual funds invest in large-cap, mid-cap, and small-cap equities. Flexi cap mutual fund schemes are usually open-ended funds where one can put their money whenever they want. These funds offer flexibility to their managers to select any company to invest irrespective of their market cap depending on the market conditions and across sectors. This lack of any shackles on the fund manager on the type of company he/she can invest in allows great flexibility to the fund manager and, therefore, is significantly responsible for generating returns.
Benefits of flexi cap mutual funds
Mutual fund experts have pointed out a few key benefits for the investors of flexi cap mutual funds. The crucial among them are listed below:
Diversification: Flexi Cap Funds allow your investment to be spread across all stocks that offer varying risk and return, thereby making investments suitable for different market conditions.
Flexibility: Flexi Cap Funds offer freedom to invest in companies of any size in all sectors and market caps. Fund managers have more freedom to allocate funds to generate higher returns compared to the benchmark.
Dynamic Asset Allocation: The fund manager can adjust the allocation between large-cap, mid-cap, and small-cap stocks based on existing market conditions and, therefore, find greater elbow room to adjust in according to market dynamics.
According to reports, Quant Flexi Cap Fund exhibited a 5-year compounded annual growth rate of 32.35% in December 2024. This was one of the best performing flexi cap funds in that month. Mutual fund experts point out that flexi cap mutual funds are especially suitable for those investors who are keen to diversify their investment portfolio for the sake of long-term growth. Investors who are open to taking a degree of risk in a long-term investment horizon should invest in flexi cap funds since they are after all equity funds.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds and crypto assets.)
The charm of a flexi cap funds lies in the fact that they offer a nice opportunity to diversify investments through a single investment since the manager of a flexi cap fund has no restrictions on investing in equities which can be large, mid or small cap. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
