Which Is Better Among A Flexi-cap And A Multi-cap Mutual Fund? Know Details Here
Flexi Cap & Multi Cap Funds: These days there is...
Flexi Cap & Multi Cap Funds: These days there is uproar in the stock market. But investors who want to invest in Mutual Funds and if they are in a dilemma whether to invest in Flexi Cap or Multi Cap, then today we will tell you what is in both types of funds. The difference is. Flexi cap is considered the best as it gives option to the fund manager to shift the allocation in large cap, mid cap and small cap wherever he wants. Whereas multicaps have to invest 25 percent of their total corpus in large cap, mid cap and small cap.
However, Flexi Cap also has some limitations. If the corpus of the next flexi cap exceeds Rs 10,000 crore, it becomes difficult for the fund manager to find better opportunities. Because the allocation of 10 to 15 percent in small caps is very high. In such a situation, flexi caps are better whose Asset Under Management (AUM) is small.
Features of Multicap
Equity funds need to invest in large cap, mid cap, small cap. Multicaps have to invest 75 percent of their total assets in the stock market ie equities. In which it is necessary to invest 25 percent in large-cap companies, 25 percent in mid-cap companies, 25 percent in small-cap companies. Irrespective of the market conditions, multicap funds have to maintain the allocation in all three types, large cap, mid cap and small cap. In multicaps, investors get the benefit of both large to midcap-smallcap giving high returns.
Features of Flexi Cap
Flexi Cap Fund is an open ended equity scheme that invests in Large Cap, Mid Cap, Small Cap companies. Flexi Cap Fund invests 65 per cent of its fund share in equities or related instruments. Unlike multicaps, there is no fixed limit for flexi cap funds to invest in large cap, mid cap and small cap.
Why invest in multi cap and flexi cap
Investors who have to invest for a long term and who can take a little risk to build a large fund. They can consider investing in flexi cap or multi cap funds through the SIP route. If the stock market is making ups and downs, in order to protect themselves from its risk, if investors invest through SIP, then they can make a big corpus for themselves in the long term.
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