The fund manager’s experience and strategy are critical, since their allocation calls drive performance. You should also assess the costs of investing in the fund.
For first-time investors looking to build a core mutual fund portfolio with a time horizon of at least five years, a good starting point is to begin a SIP in flexi-cap funds. A look at how this approach helps newbies.
WHAT ARE FLEXI-CAP FUNDS?
Flexi-cap funds are schemes that give fund managers the freedom to invest across the market spectrum—large-cap, mid-cap, or small-cap stocks—without the rigid allocation rules of other categories. The only mandate is that at least 65% of the portfolio must remain invested in equities and equity related instruments. This flexibility enables fund managers to invest where they identify value, with the freedom to select a benchmark that best aligns with the scheme’s strategy.
WHY DOES SIP IN A FLEXI-CAP FUND WORK WELL FOR A FIRST-TIME INVESTOR LOOKING FOR PURE STOCK MARKET EXPOSURE?
When you’re new to equities, the biggest hurdle is deciding where to invest. Flexi-cap funds take that call for you. These funds let the manager move money across large, mid and small stocks depending on where the market is throwing up opportunities. Especially in markets like the current one, starting with a SIP means you don’t have to time your entry. It’s a simple, low-maintenance way to participate in the stock market without having to pick stocks yourself.
HOW BIG IS THE FLEXI-CAP CATEGORY, AND WHY HAS IT BECOME SO POPULAR?
There are currently 41 flexi-cap schemes managing assets worth `5.12 lakh crore. This makes flexi-cap the largest category within the actively managed mutual fund space. Currently, the industry handles equity AUM worth `33.68 lakh crore. The popularity of flexi-cap funds is due to their uncomplicated all-weather holding structure. Large-, mid- and small-cap funds must follow strict allocation rules. Large-cap funds must put at least 80% in the top 100 companies by market value, mid-caps must allocate 65% to companies ranked 101–250, and small-caps 65% to firms ranked 251 and below. Flexi-cap funds face no such restrictions.
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HOW DO YOU IDENTIFY A GOOD FLEXI-CAP FUND FOR SIP?
Look for a consistent long-term track record. It’s ideal to look for a fund with steady performance across at least 5–7 years and through different market cycles. The fund manager’s experience and strategy are critical, since their allocation calls drive performance. You should also assess the costs of investing in the fund.
WHAT ARE FLEXI-CAP FUNDS?
Flexi-cap funds are schemes that give fund managers the freedom to invest across the market spectrum—large-cap, mid-cap, or small-cap stocks—without the rigid allocation rules of other categories. The only mandate is that at least 65% of the portfolio must remain invested in equities and equity related instruments. This flexibility enables fund managers to invest where they identify value, with the freedom to select a benchmark that best aligns with the scheme’s strategy.
WHY DOES SIP IN A FLEXI-CAP FUND WORK WELL FOR A FIRST-TIME INVESTOR LOOKING FOR PURE STOCK MARKET EXPOSURE?
When you’re new to equities, the biggest hurdle is deciding where to invest. Flexi-cap funds take that call for you. These funds let the manager move money across large, mid and small stocks depending on where the market is throwing up opportunities. Especially in markets like the current one, starting with a SIP means you don’t have to time your entry. It’s a simple, low-maintenance way to participate in the stock market without having to pick stocks yourself.
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HOW BIG IS THE FLEXI-CAP CATEGORY, AND WHY HAS IT BECOME SO POPULAR?
There are currently 41 flexi-cap schemes managing assets worth `5.12 lakh crore. This makes flexi-cap the largest category within the actively managed mutual fund space. Currently, the industry handles equity AUM worth `33.68 lakh crore. The popularity of flexi-cap funds is due to their uncomplicated all-weather holding structure. Large-, mid- and small-cap funds must follow strict allocation rules. Large-cap funds must put at least 80% in the top 100 companies by market value, mid-caps must allocate 65% to companies ranked 101–250, and small-caps 65% to firms ranked 251 and below. Flexi-cap funds face no such restrictions.
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Look for a consistent long-term track record. It’s ideal to look for a fund with steady performance across at least 5–7 years and through different market cycles. The fund manager’s experience and strategy are critical, since their allocation calls drive performance. You should also assess the costs of investing in the fund.
