MUTUAL FUNDS: Make the most of changing market trends with flexi-caps
Given the current market uncertainty and the elevated valuations in certain mid-cap and small-cap pockets, investors are preferring to invest in flexi-cap funds. These funds offer the unique advantage of allowing fund managers to switch between large, mid, and small-cap stocks without limitations.
The rigid mandates of other fund categories, such as multi-cap, mid-cap, and large-cap, limit the flexibility to adapt to market conditions. In contrast, flexi-cap funds have the flexibility to invest across the entire market spectrum and diversify the investment portfolio across companies with different market capitalisation. This helps them to adapt to changing market trends and optimise returns for investors without any restriction.
Feroze Azeez, deputy CEO, Anand Rathi Wealth, says the flexibility to shift allocation offers an opportunity to the fund manager to mitigate risks by taking exit calls and shifting to investments that have the potential to generate returns. “These funds help you get risk-adjusted returns as the blue-chip stocks will help you gain stability and small-cap stocks help you maximise growth,” he said.
Similarly, Nirav Karkera, head, Research, Fisdom, says the flexibility is particularly exciting for investors, as it empowers fund managers to make strategic shifts based on market dynamics, potentially leading to stronger risk-adjusted returns. “The proposition relieves the investor of the burden to actively manage market-cap exposures during times of heightened uncertainty like now. An additional benefit would be no exit load or tax implications despite such active management,” he says.
All-weather equity fund
Flexi-cap funds employ several strategies to mitigate volatility, including active allocation
