Flexicap vs Large Cap: Which Mutual Fund Is Better? And Why?

Flexicap mutual fund schemes give investors the flexibility to invest in large, mid and small cap stocks, adjusting allocation based on market conditions to manage risk and diversify portfolio. This adaptability has made flexicap schemes a popular choice for investors seeking diversification and wanting to deal with market fluctuations.

Flexicap schemes are popular among investors looking to diversify their portfolio

Flexicap schemes provide the flexibility to adjust allocations based on current market conditions or new opportunities.

“Unlike the constraints of a single large-cap, mid-cap or small-cap plan that focuses solely on each company, a flexi-cap plan provides the opportunity to adjust allocations depending on prevailing market conditions and opportunities. This adaptability has made flexi-cap schemes increasingly preferred by investors looking to diversify their portfolio,” said Gurmeet Singh Chawla, Director, Master Capital Services.

What is a large-cap company?

Large companies are well-capitalized companies with stable management and strong balance sheets, often leading their respective markets and demonstrating consistent growth over time. They typically provide modest capital appreciation during bullish periods of the market while demonstrating resilience to economic downturns. Moreover, its high trading volume ensures sufficient liquidity within the fund.

What are small and mid-cap stocks?

Mid-cap and small-cap stocks, on the other hand, refer to smaller but growing companies. Their long-term growth trajectory provides the potential for compounding returns, and they often outperform their benchmarks during periods of economic expansion. However, they are more vulnerable to market downturns and may face liquidity challenges.

Why should investors choose a flexi-cap scheme over a large-cap scheme?

Flexicap schemes offer an alternative to large cap schemes by offering exposure to a combination of large, mid and small cap stocks. This provides stability through the liquidity provided by large-cap stocks, while also providing opportunities for alpha generation through mid- and small-cap stocks. Investors can effectively capture the recovery phase of the investment cycle by gradually shifting to large-cap stocks while maintaining exposure to mid- and small-cap stocks.

“For example, right now we prefer the relative safety of large-cap stocks and the security of holding some liquidity based on the risk-reward afforded by the current valuations of large-cap stocks. Therefore, the investment cycle To capitalize on the recovery theme, we can also move towards large caps in a phased manner without significantly reducing mid and small caps,” said Shaily Gang, Head of Product, Tata Asset Management. said.

For investors who find it difficult to adjust the allocation within their portfolio, investing in a flexi-cap or multi-cap fund gives them access to professional fund management services.

“If an investor is unable to change the allocation between the held funds within the portfolio to reflect the above navigation, the fund manager may invest in a flexi-cap or multi-cap fund and change the allocation depending on the market. “It is best to utilize the professional services of “Tata Asset Management, Head Products, who advised the prospects,” said Shaily Gang.

Gurmeet Singh Chawla, Director, Master Capital Services Ltd., said that unlike large-cap schemes that focus only on large-cap stocks, flexi-cap schemes offer the flexibility to diversify into large-cap, mid-cap and small-cap stocks. He emphasized that he would provide the following. cap stock. This adaptability makes flexicap schemes a better option for investors with a higher risk tolerance and a willingness to deal with market fluctuations.

Stock MF inflows reach the highest level in almost two years INR21,780-cr in January 2024: AMFI data

There was a notable spike in net inflows to equity mutual funds in January, with a significant increase in net inflows in total. INRAt $2178 billion, it was the highest monthly inflow in nearly two years. This strong momentum was driven by sustained investor interest in small-cap funds and significant contributions from thematic funds.

Additionally, monthly Systematic Investment Plan (SIP) contributions have reached an unprecedented milestone, with a total of INR1,883.8 billion yen, exceeding the previous month’s figure INR1,761 billion.

Disclaimer: The views and recommendations expressed above are those of individual analysts and not of Mint. We recommend checking with a certified professional before making any investment decisions.