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Stocks are divided into categories based on the market capitalization of the publicly listed companies they represent. There’s the small-cap category that includes up and coming companies in their nascent stage.
For example, Heidelberg Cements, Thyrocare Technologies, Rossari Biotech, and others. Then there’s the mid-cap category with solid businesses that aim to become industry leaders in the near future.
A flexi-cap mutual fund has the freedom to invest in stocks that fall under small, mid, and large caps. This philosophy allows top flexi-cap funds to create a diverse and potentially lucrative portfolio.
At the same time, flexi-cap funds have the freedom to modify their portfolio during volatile times. For example, adding more large-cap stocks and reducing exposure to small-cap stocks for better stability.
These factors are known to put flexi-cap funds a notch above other mutual funds that are tied down to a single cap, especially when it comes to diversification.
Fun fact: Flexi-cap funds were previously known as multi-cap funds.
Investing in a flexi-cap fund negates the need to buy multiple mutual funds across caps. As an investor, this means you can save time, effort, and money that would otherwise be spent on fund picking and fees.
That said, you still have to pick the right flexi-cap mutual funds from hundreds of scheme variations. An app like Cube can make this easy for you by giving you access to curated flexi-cap fund recommendations. You can consult a Cube Wealth Coach or download the Cube Wealth App.
Cube works with Wealth First, a mutual fund advisor that’s been in the game for 20+ years. Here are the best flexi-cap funds for 2022 as handpicked by WF.
This top flexi-cap fund has been around since 2005 and manages a portfolio worth ₹15,449 crores. It has generated 13.28% returns over the past 3 years and 13.37% over the past 5 years.
SBI Flexicap Fund’s portfolio includes the likes of Cipla, HDFC Bank, Sheela Foam, and even Google! To make things easier, we’ve compiled the top 5 stocks held by SBI Flexicap Fund.
This top flexi-cap fund is older than Google! It was launched in 1995 and currently manages a portfolio worth ₹27,770 crores. It has generated 13.62% returns over the past 3 years and 10.40% in the past 5 years.
HDFC Flexi Cap Fund’s portfolio includes SBI, National Thermal Power Corporation, ITC, and more. Here are the top 5 stocks held by HDFC Flexi Cap Fund.
A flexi-cap fund’s liberal investment philosophy allows it to leverage the growth of small-caps and mid-caps to generate potentially high returns. At the same time, it can use large-caps to add a layer of stability.
Generally, flexi-cap funds are known to generate 12-16% returns in 5+ years. There may be fluctuations in the short term because of the volatile nature of the stocks and the market.
Most mutual funds are diverse assets but are limited to the market cap they invest in. Flexi-cap funds do not have this limitation and can go one step further to invest across market caps.
Think of it as going to the bakery and buying sweets, savouries, and coffee while the rest of the mutual funds are limited to one of the three. Want a no nonsense guide to diversification? Click here.
The term flexibility has appeared multiple times and rightly so - it is one of the factors that make flexi-cap funds stand out in the world of mutual funds. The multi-cap philosophy allows flexi-cap funds to:
Flexi-cap funds invest in stocks that are known for short term volatility. Furthermore, stocks are prone to price swings due to various factors like trends, macroeconomic conditions, and more.
That’s why you as an investor must understand if flexi-cap funds are right for you. An easy way to do this is by taking a risk quiz that’s available on apps like Cube.
Flexi-cap funds have the freedom to invest across caps. But not all flexi-cap funds, like any mutual fund, are made equal. Some are good, some are bad, while the rest are average.
This may lead to a possibility where the fund management team invests in the wrong stocks or relies too much on the wrong caps. That’s why it’s best to rely on flexi-cap funds handpicked by experts. You can consult a Cube Wealth Coach or download the Cube Wealth App.
Watch this video to know if you should pick mutual funds on your own.
A flexi-cap fund gives you access to multiple stocks. There may be a situation where you end up buying multiple flexi-cap funds with overlapping portfolios. This can lead to high fees.
Want to know how to avoid this mistake? Speak to a Cube Wealth Coach for guidance.
Flexi-cap funds are equity funds and are treated as such during taxation. If you sell a flexi-cap fund after 1 year, you’ll have to pay a Short Term Capital Gains (STCG) tax. STCG is taxed at a flat 15%.
If you hold the flexi-cap fund for more than 1 year, you’ll have to pay a Long Term Capital Gains (LTCG) tax. LTCG is taxed at a flat rate of 10%. Gains of up to ₹1 lakh are free from LTCG tax.
Ans. Flexi-cap funds offer investors the potential to benefit from a diversified portfolio of stocks across different market capitalizations. In 2023, they can be a suitable choice for those seeking flexibility and growth opportunities in their investment portfolio.
Ans. Key factors to evaluate include the fund's historical performance, the experience and track record of the fund manager, expense ratios, the fund's investment strategy, and your own investment goals and risk tolerance.
Ans. Flexi-cap funds offer more flexibility in terms of stock selection compared to specific categories like large-cap, mid-cap, or small-cap funds. They can adapt to changing market conditions and allocate assets across various market capitalizations, providing a balanced approach.
Ans. Flexi-cap mutual funds do not offer specific tax benefits, but they may qualify for long-term capital gains tax treatment if held for over one year. Investors should consult with tax advisors to understand the tax implications of their investments.
In 2023, flexi-cap mutual funds present a versatile and dynamic investment option for Indian investors looking to capitalize on the potential growth of the equity markets. These funds provide the unique advantage of flexibility, allowing fund managers to navigate changing market conditions and invest across a spectrum of market capitalizations.
When selecting the best flexi-cap mutual fund for 2023, it's essential to conduct a comprehensive evaluation. Key factors to consider include the fund's historical performance, the experience and track record of the fund manager, expense ratios, and the fund's investment strategy. Your individual investment goals and risk tolerance should guide your choice, as flexi-cap funds offer a range of approaches, from value-oriented to growth-focused.
This includes the likes of AU Small Finance Bank, Glenmark, and others. Finally, there’s the large-cap category with iconic companies that have been around for decades. Think of TCS, Wipro, Reliance, and others. You can consult a Cube Wealth Coach or download the Cube Wealth App.
The problem is picking stocks from each category. There are too many options and too much data to sift through. But there’s a solution: flexi-cap mutual funds.
Note: Facts & figures are true as of 05-06-2022. None of the information shared here is to be construed as investment advice. Exercise caution when investing in assets like stocks, mutual funds, alternative investments, and others.
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