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Best Flexi Cap Mutual Funds To Invest In 2022

flexi-cap-funds

The market regulator Securities and Exchange Board of India (SEBI) has been accommodating to the needs of existing investors. Flexi Cap Funds, a new type of multi-cap funds, was introduced on November 6, 2020. The notification stipulates that a minimum of 65% of total assets must be invested in equities and equity-related products.

 

The declaration was driven by the Mutual Fund Advisory Committee’s recommendations (MFAC). Prior to this, the market regulator implemented the rationalisation of multi-cap funds.

 

Prior to September 2020, multi-cap funds were unrestricted in their ability to invest in companies with diverse market capitalizations. This means that the fund managers of multi-cap plans should invest 65 percent of their net assets in equities and equity-related instruments. These investments may be made in companies with any market capitalization. SEBI released a circular in September 2020 mandating that multi-cap funds invest at least 75% of their total assets in equity and equity-related securities, with a minimum exposure of 25% to equity and equity-related securities of each large-cap, mid-cap, and small-cap company. This was implemented because the majority of multi-cap funds have shifted their attention to large-cap stocks. It also caused investors to be concerned. As they sought to maximise profits via a portfolio including a diverse assortment of stocks across market capitalization, they created a diversified portfolio of stocks.

 

 

Post-implementation, fund managers were restricted to a maximum of 25% portfolio exposure to a single market capitalization regardless of economic conditions.

 

Consequently, on the advice of MFAC, SEBI decided to introduce a new category. It enables fund managers to construct a portfolio that is in sync with the market and may provide favourable returns. The Securities and Exchange Board of India (SEBI) introduced a Flexi-cap category for mutual funds. This also brings back the fund managers into play. This is because the scheme’s success will depend on the fund manager’s expertise in stock selection and investment timing.

 

What are Flexi Cap Funds?

 

In accordance with SEBI regulations, Flexi Cap Funds must invest at least 65 percent of their assets in equities or equity-related products. Flexi cap mutual funds have a diverse portfolio since their investment capital is allocated to equity shares of companies with varying market capitalizations. Consequently, these funds help decrease portfolio risk for investors wanting exposure to equities.

 

Unlike multi-cap mutual funds, Flexi-Cap Funds are not required to invest a specific proportion of their assets in large, mid, and small-cap equities. In the case of such funds, it is the responsibility of the fund management to estimate the future growth of diverse companies, regardless of their size. Then, they are accountable for investing money in the most profitable stocks to maximize returns for investors.

 

In addition, SEBI has permitted fund companies to convert an existing scheme into a Flexi-Cap scheme. This is given, and all fund houses comply with the necessity for modifications to the scheme’s core characteristics.

 

List Of Top Flexi Cap Mutual Fund To Invest In India (as per 5-Year Return)

 

Scheme  5-Year Return AUM (Cr)
Quant Flexi Cap Fund 18.92% 626.78
Parag Parikh Flexi Cap Fund 17.19% 25,930.88
PGIM India Flexi Cap Fund 16.32% 4,974.30
UTI Flexi Cap Fund 14.83% 25,426.26
Canara Robeco Flexi Cap Fund 14.48% 8,110.71
IDBI Flexi Cap Fund 13.59% 369
Edelweiss Flexi Cap Fund 13.55% 1,001.89
HDFC Flexi Cap Fund 13.52% 29,372.11
Union Flexi Cap Fund 13.46% 1,263.74
DSP Flexi Cap Fund 13.00% 7,710.40

Source: AMFI (data as on 29/09/2022)

 

Features of Flexi-Cap Funds in India

 

These are the key characteristics of a Flexi-cap fund:

 

 

 

 

 

Things To Consider Before Investing in Flexi-Cap Fund

 

 

 

 

 

Taxability on Equity Mutual Funds

 

The taxation of equity mutual funds, such as flex cap mutual funds, is discussed here.

 

 

These funds are classified as equity-oriented since they must invest at least 65 percent of their assets in equities. Now, capital gains realized within a year are classified as short-term gains (STCG). Such gains are subject to a 15% tax rate.

 

 

If you sell your units after 12 months and realize a profit, the realized returns are taxed at 10%. If these returns do not exceed Rs. 1 lakh, they will not be subject to long-term capital gains (LTCG) tax.

 

Who Are These Best Suited For Flexi cap Fund ?

 

This mutual fund category is suitable for investors desiring complete freedom in allocating their holdings to a certain market capitalization. In other words, investors who desire a diverse portfolio of equities can confidently invest in Flexi cap funds. Finding quality mid-and small-cap companies now can be tricky and demanding. In the immediate future, fund managers will allocate a greater proportion of these funds to large-cap stocks, but as the market improves, they will increase their allocations to mid-and small-cap stocks. Consequently, while Flexi cap funds with a large-cap allocation might mitigate volatility to some extent, investors with a moderate to high-risk tolerance and a 5-year investment horizon should consider investing in this mutual fund schemes.

 

Closer Look On Best Flexi Cap Mutual Funds (as per 5-Year Return)

 

This fund has existed for nine years and eight months, having been established on January 1, 2013. As of 29th September 2022, Quant Flexi Cap Fund Direct Growth has INR 626 Crores in assets under management (AUM) and is a minor fund within its category. The fund’s expense ratio of 0.58% is lower than the expense ratios of the majority of other similar funds.

The returns of the Quant Flexi Cap Fund Direct-Growth over the past year were 5.29 percent. Since its inception, it has generated average yearly returns of 18.91%. Every two years, the fund has quadrupled the money put in it.

 

Ppfas Mutual Fund’s Parag Parikh Flexi Cap Fund Direct-Growth is a Multi Cap mutual fund. This fund has existed for nine years and four months, having been established on 13 May 2013. As of 29th September 2022, the Parag Parikh Flexi Cap Fund Direct Growth has INR 25,930 Crores in assets under management (AUM) and is a medium-sized fund within its category. The expense ratio of 0.77 percent is comparable to that of the majority of other Multi Cap funds.

The one-year returns for the Parag Parikh Flexi Cap Fund Direct-Growth were -5.03 percent. Since its inception, it has generated average yearly returns of 18.73%. Every three years, the fund has doubled the money invested in it.

 

This fund has existed for seven years and seven million dollars since its inception on 11/02/2015. As of 29th September 2022, PGIM India Flexi Cap Fund Direct Growth has INR 4,974 Crores in assets under management (AUM) and is a medium-sized fund within its category. The fund’s expense ratio of 0.31% is lower than that of the majority of other Multi Cap funds.

The returns of the PGIM India Flexi Cap Fund Direct-Growth during the past year were -6.99%. Since its inception, it has generated average yearly returns of 14.29%. Every three years, the fund has doubled the money invested in it.

 

UTI Mutual Funds UTI Flexi Cap Fund Direct Growth is a Multi Cap mutual fund. This fund has existed for nine years and eight months, having been established on January 1, 2013. As of 29 September 2022, UTI Flexi Cap Fund Direct-Growth has INR 25,426 Crores in assets under management (AUM) and is a medium-sized fund within its category. The fund has a higher expense ratio than the majority of other Multi Cap funds, at 0.93 percent.

The returns of the UTI Flexi Cap Fund Direct Growth during the past year were -10.10%. Since its inception, it has generated average annual returns of 15.01 percent. Every three years, the fund has doubled the money invested in it.

 

Multi-Cap mutual fund from Canara Robeco Mutual Fund. This fund has existed for nine years and eight months, having been established on January 1, 2013. As of 29 September 2022, Canara Robeco Flexi Cap Vehicle Direct-Growth has an AUM of 8,110.71 Crores and is a medium-sized fund within its category. The fund’s expense ratio of 0.49% is lower than that of the majority of other Multi Cap funds.

The one-year returns for the Canara Robeco Flexi Cap Fund Direct Growth were -3.71 percent. Since its inception, it has generated average yearly returns of 14.14 percent. Every three years, the fund has doubled the money invested in it.

 

This fund has existed for eight years and six months, having been established on March 10, 2014. As of 29 September 2022, IDBI Flexi Cap Fund Direct-Growth has INR 369 Crores in assets under management (AUM) and is a minor fund within its category. The expense ratio of 1.17 percent is higher than that of the majority of other Multi Cap funds.

The returns on the IDBI Flexi Cap Fund Direct Growth during the past year were 1.14 percent. Since its inception, it has generated average yearly returns of 17.05 percent. Every three years, the fund has doubled the money invested in it.

 

Edelweiss Mutual Fund’s Edelweiss Flexi Cap Fund Direct-Growth is a Multi Cap mutual fund. This fund has existed for seven years and eight months, having been established on January 13, 2015. As of 29 September 2022, the Edelweiss Flexi Cap Fund Direct-Growth has INR 1,001.89 Crores in assets under management (AUM) and is a medium-sized fund within its category. The fund’s expense ratio of 0.52% is lower than that of the majority of other Multi Cap funds.

The returns of the Edelweiss Flexi Cap Fund Direct Growth for the past year were -0.55%. Since its inception, it has generated average yearly returns of 12.54 percent. Every three years, the fund has doubled the money invested in it.

 

Hdfc Mutual Fund’s HDFC Flexi Cap Direct Plan-Growth is a Multi Cap mutual fund. This fund has existed for nine years and eight months, having been established on January 1, 2013. As of 29 September 2022, HDFC Flexi Cap Direct Plan-Growth has INR 29,372 Crores in assets under management (AUM) and is a medium-sized fund within its category. The fund’s expense ratio of 1.05% is greater than that of the majority of other Multi Cap funds.

The returns on the HDFC Flexi Cap Direct Plan Growth during the past year were 7.50%. Since its inception, it has generated average yearly returns of 14.70%. Every three years, the fund has doubled the money invested in it.

 

Union Mutual Fund’s Union Flexi Cap Fund-Growth is a Multi Cap mutual fund. This fund has existed for 11 years and four months, having been established on May 20, 2011. As of 29 September 2022, Union Flexi Cap Fund-Growth has INR 1,263 crores in assets under management (AUM) and is a minor fund within its category. The fund has a higher expense ratio than the majority of other Multi Cap funds, at 2.27 per cent.

Union Flexi Cap Fund-Growth returns over the past year have been -3.89 per cent. Since its inception, it has generated average yearly returns of 10.94%. Every three years, the fund has doubled the money invested in it.

 

DSP Mutual Fund’s DSP Flexi Cap Fund Direct Plan-Growth is a Multi Cap mutual fund. This fund has existed for nine years and eight months, having been established on January 1, 2013. As of 29 September 2022, DSP Flexi Cap Fund Direct Plan-Growth has INR 7, 710.40  Crores in assets under management (AUM) and is a medium-sized fund within its category. The expense ratio of 0.73 percent is comparable to that of the majority of other Multi Cap funds.

The one-year returns of DSP Flexi Cap Fund Direct Plan-Growth were -6.63 percent. Since its inception, it has generated average annual returns of 14.34%. Every three years, the fund has doubled the money invested in it.

 

The Bottom Line:

 

Flexi-cap funds are dynamic equity funds that invest substantially in equities across all market capital segments, like multi-cap funds. Flexi-cap funds differ from multi-cap funds in that there is no limit on the proportion of money allocated to any segment, whereas multi-cap funds must invest at least 25% of their assets in each of the big, mid, and small capitalizations. They are diversified and capitalize on the rise of small- and mid-cap firms as well as the stability of large-cap stocks. Fund managers can swap between equities and market groups based on their market forecasts.

 

FAQs

 

Flexi cap funds are best suited for moderate investors who seek to balance risk and reward, and long-term investment can generate wealth.

 

Given that no two people have the same financial objectives, it is difficult to determine which fund is preferable. Therefore, before making a choice, you must decide on your investing time horizon, your investment objectives, and your risk tolerance.

 

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