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Flexi Cap Vs Multi Cap Funds: An Informative Guide
Reviewed by: Fibe Research Team
- Published on: 28 Nov 2024
Reviewed by: Fibe Research Team
Mutual funds are a great way to build long-term wealth and protect against inflation, which is why they’re a common choice in investment portfolios. When it comes to equity mutual funds, there are several types to consider, with multi-cap and flexi-cap funds being two popular options.
Read on to understand how they differ and how you can choose the one that best fits your financial goals.
These are equity schemes that spread their investments across large-cap, mid-cap and small-cap companies, offering diversification. Note these features to better understand it:
These are funds that invest in companies across different market sizes and sectors, offering higher flexibility to your portfolio. Here are its features:
Check out the following table to learn all about the features of flexi-cap vs multi-cap schemes:
| Basis of Difference | Multi-Cap Funds | Flexi-Cap Funds |
|---|---|---|
| Meaning | These funds invest in large, mid and small-cap companies | These funds invest in companies of any market cap |
| Exposure to Equity | Minimum 75% of assets in equities | Minimum 65% of assets in equities |
| Market Cap Allocation | At least 25% allocation is done in large, mid and small-cap companies, according to the Securities and Exchange Board of India (SEBI) | No fixed allocation to market cap categories as they do not have any mandate |
| Risks | Higher risk due to exposure to a relatively diverse market cap | Moderate risk since these funds have a balanced exposure to various stocks |
| Management | Fund manager is free to select from any market cap | Fund manager selects stocks from specific market caps |
The right option for you largely depends on why you’re planning to invest, meaning your investment goals. Your risk appetite is yet another crucial factor. Gaining insight into their main distinctions can assist you in fully understanding both choices. This way, you can make a more knowledgeable decision.
For higher risks in exchange for the possibility of greater rewards, multi-cap funds are a perfect choice. On average, approximately 5 to 7 years of commitment is required. This is due to the fact that they consist of a large percentage of mid-cap and small-cap stocks.
Alternatively, if you are concentrating on large-cap stocks, flexi-cap funds might be a more attractive choice. They also provide the option to invest in stocks of medium-sized and small-sized companies. If you want to invest for 5 years, this could be a suitable choice for you.
However, whether it is flexi-cap, multi-cap or any other type of mutual fund, you can use any of them to get a loan in just 10 minutes. With the Fibe Loan Against Mutual Funds, you can easily pledge these as collateral to get up to ₹10 lakhs without dissolving your investment. Apply now to get funds for any emergency with flexible repayment options by registering on our website or downloading our Fibe app.
Market volatility can significantly impact the performance of a fund. During uncertain times, flexi-cap funds’ flexible approach may offer an advantage. They tend to perform better in volatile markets by spreading investments across various market segments. On the other hand, multi-cap funds may not perform well.
Yes, you can switch between various types of mutual funds easily. You have the option to transfer units either partially or entirely from one mutual fund scheme to another, based on your investment needs.
Yes, flexi-cap funds are ideal for long-term investment goals. This is because they offer the flexibility to allocate assets across different market capitalisations, depending on market conditions and the fund manager’s strategy.
No, multi and flexi-cap funds are not the same. However, both are open-ended equity mutual funds that invest in stocks across various market capitalisations.
