Going by the performance of flexi-cap funds in the past decade, the returns generated by the 12 schemes were over 12%, if an individual was investing via a systematic investment plan (SIP). About two flexi-cap schemes offered over 15% SIP returns in the past decade, while two schemes offered single-digit returns. These were the findings of data compiled by a company providing online research tools for mutual funds.
Flexi-cap funds remain relatively new in the equity mutual funds category. Flexi-cap fund is an open-ended dynamic equity fund, which is required to have about 65% of its total assets invested in equities. These funds are known to offer exposure to stocks of all sizes and across various sectors. The assets under management (AUM) of flexi-cap funds have spiked by about 70% since they were introduced in November 2020.
Diversified equity schemes, referred to as multi-cap schemes that focus on investing across capitalisations and sectors, have been around for a long time. In November 2020, the markets regulator the Securities and Exchange Board of India (SEBI) introduced the term flexi-cap for such funds.
An individual with a long-term financial goal (over seven years) can consider investing in flexi-cap funds. Moreover, fund managers have the flexibility to alter portfolios as per the changing equity market dynamics.
A new entrant in the mutual funds space who has started investing in the scheme via SIPs recently can still look forward to making respectable returns, at times higher than other safe asset classes from equity schemes, provided they continue for a long duration.
So, investors who are aiming to make gains that comfortably beat the inflation rate, as well as returns from fixed-income options, can consider investing in flexi-cap funds. The only condition is that such investors must be prepared to face the possibilities of ups and downs in their investments in the long run.
Rajiv is an independent editorial consultant for the last decade. Prior to this, he worked as a full-time journalist associated with various prominent print media houses. In his spare time, he loves to paint on canvas.
