25 Apr 2024
In the ever-evolving landscape of mutual fund investing, Flexi Cap mutual fund is a type of mutual fund that aims to offer investors diversification and flexibility. In this article, we will look into flexi-cap mutual funds and shed some light on their features, benefits and differences from other fund categories.
What is a Flexi-Cap Fund?
A Flexi-cap fund offers flexibility in asset allocation across various market capitalizations. Unlike traditional equity funds that focus on large-cap, mid-cap and small-cap stocks, the flexi-cap fund gives a choice to investors to invest in a wide spectrum of stocks based on market conditions.
How a Flexi Cap Fund Works?
The flexi-cap funds majorly work on the principle of Investing in Mutual Funds in different market cap companies in any domain that offers long-term potential growth. Additionally, it aims to provide consistent returns to retail investors using research-driven strategies to navigate through market fluctuations effectively.
Key Characteristics of Kotak Flexi-Cap fund:
The investment objective is to generate long-term capital appreciation by investing in a portfolio of predominantly equity and equity-related securities, generally focused on a few selected sectors across market capitalization.
There is no restriction on which type of sectors the scheme can take exposure to, and the portfolio will be generally diversified at the stock level across market capitalization.
The scheme also tries to capture themes that are in flavour.
How are Flexi-cap Funds Different from Multi-Cap Funds?
Multi-Cap funds are equity-oriented funds that invest in a diversified range of corporations like small-cap, mid-cap and large-cap, whereas Flexi-Cap FUnds invest in companies with no market capitalisation.
Secondly, Mutlicap funds require at least 75 per cent of total investment in equities while flexi-cap funds its just 65 per cent. Lastly, Mutlicap funds can invest in any stork with any market capitalization, whereas flexi-cap funds only invest in stocks with specified market cap.
How to Invest in Flexi-Cap Funds?
It is quite easy to invest in Flexi-Cap Funds. The initial step is to create an account on a mutual fund website or mobile application and fulfil the KYC requirements to start investing in flexi cap fund.
Why Flexi-Cap Funds are Popular?
Flexi-cap funds are the most preferred choice among various investors because they cater for their needs by offering them exposure to a mix of small, large and mid-cap stocks. This allows investors to take advantage of the stability of large-cap funds while leveraging opportunities to yield more returns from small and mid-caps.
Taxation of Flexi-Cap Mutual Funds
Flexi-cap Mutual Funds invest primarily in equity or equity-related instruments, thus all the gains are taxable just like equity mutual funds. If an investor redeems the investment in a flexi-cap fund before keeping it for a year from the date of purchase then profit will be taxed under short-term capital gains at the rate of 15 percent. However, if there is capital gain below 1 lac INR then its tax exempted.
Benefits of Investing in Flexi-Cap Funds
A few of the key benefits of Flexicap funds are listed below:-
- It is quite ideal for long-term financial goals which is more than 5 years
- Fund managers have flexibility in adjusting portfolios based on market conditions.
- It provides exposure to Large , Mid and small Cap companies .
Risk Involved in Flexi-Cap Mutual Funds
Like other types of equity funds, this also has some risks associated with it like, liquidity risks and market volatility. Investors must understand all the risks properly and make informed decisions using investment strategies accordingly to achieve their financial goals.
Factors to consider While investing in Flexi-Cap Funds
Before investing in flexi-cap funds it is necessary to consider different factors like expense ratio, investment philosophy, fund performance fund manager expertise and most importantly if the fund is suitable to the investor's risk tolerance and investment objectives, accordingly you can opt for SIP or Lumpsum Investment option.
Conclusion
Overall, Flexi-cap funds provide a dynamic approach to mutual fund investing by offering flexibility to leverage diverse market opportunities with minimum risk exposure. As an investor, if someone is looking to navigate through the complexities of financial markets, then Flexi-Cap Funds stands out as a compelling investment option. You can check your Flexi cap fund NAV here- Get NAV
Frequently Asked Questions
1. What are the rules of the Flexicap fund?
There are few regulatory constraintson flexicap funds. It allows the fund manager to allocate assets based on their investment objectives and market conditions.
2. What is the minimum investment in Flexi Cap Fund?
The minimum investment in flexi-cap fund can differ from scheme to scheme however it ranges from rupees 500 to rupees 5000.
3. Is a Flexi-cap Fund debt or equity?
Flexi-cap fund mostly invests in equity and its related instruments across diverse market capitalization.
4. Is there a lock-in period for the Flexicap fund?
There is no fixed lock-in period for Flexicap funds. Investors can redeem their investments whenever they have any liquidity requirements
Related Blogs:
1. What is AUM in mutual fund?
2. What is Sharpe Ratio?
3. Top Tax Saving Options
4. Exit Load in Mutual Fund
Disclaimer
The above risk-o-meter is based on the scheme portfolio as on 31st March, 2024. An addendum may be issued or updated on the website for new risk-o-meter
Investors may consult their Financial Advisors and/or Tax advisors before making any investment decision.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY