The term flexi-cap fund dropped in India on November 6, 2020 when SEBI released a circular introducing it as a new category under equity schemes.
Flexi-cap funds have the liberty to invest across any of the 3 categories – small-cap, mid-cap and large-cap without any limits, as long as at least 65% of the fund consists of equity and equity-related instruments. Flexi, indeed!
Investors get to diversify across companies of various market caps whilst reducing volatility and curbing risk.
Here’s a look at some benefits of this fund.
Benefits of A Flexi-cap Fund
1. Diversification
When you think of investing across market caps, diversification would pop up in your mind first, and rightly so!
There is a ‘go-anywhere’ approach to managing this fund which increases exposure to various sectors, themes and styles.
2. Risk Mitigation
Let’s say one has invested solely in small cap and down goes the market. Who gets hit the most? Small cap!
A well-diversified portfolio cushions an investor against market ups and downs and mitigates the risk associated.
3. Market Cycles
Remember the dotcom crisis, the 2008 financial crisis or the March 2020 crash?
Markets have their fair share of roller coaster rides but it is our job, as investors to stay as secured as possible during the rides. A flexi-cap fund’s dynamic nature helps it to steer well through various market cycles.
4. Dynamic
How does one grow if one cannot evolve with the fast-moving world? A theme that was hot 5 years ago may not even be relevant today.
Thus, a fund that is dynamic in nature and adapts to the ever-evolving world of investing is more appropriate.
A flexi-cap fund overweights or underweights across small, mid and large cap stocks depending on what’s attractive and is regularly monitored.
ICICI Prudential Mutual Fund Launched Flexi-cap Fund
ICICI Prudential Mutual Fund has announced the launch of a Flexi-cap fund, an open-ended equity scheme that aims to provide capital appreciation by investing in equity and equity-related securities across market capitalization.
The New Fund Offer (NFO) has opened on 28 June and will be closing on 12 July.