Flexi-cap Funds Can Balance Well The Risk And Return; Know What Are They And Why You Should Choose These Funds

by Shatakshi Gupta

Volatility in the stock market is well known, but from a long-term perspective, this is the right time to invest in the stock market. Mutual funds help investors who have limited knowledge of the stock market. These days if you are planning to invest in mutual funds then you can invest in Flexi-cap funds. By investing in these funds, you can get more returns than conventional saving schemes. Today, we will tell you about Flexi-cap funds.

 What is a Flexi-Cap Fund?

 As the name suggests, Flexi-cap is an equity mutual fund that has the flexibility to invest. In this, the fund manager invests the money in small, mid or large-cap, depending on the market movement. In this, the fund manager is not bound as to how much he has to invest in which fund category.

Unlike mid-cap or small-cap funds where the funds focus on stocks based on market capitalisation, Flexi-cap funds can invest in any company irrespective of the company’s market capitalisation. You can start investing in these funds with as low as 500 rupees.

Who should invest in this?

Read more: Boost Your Portfolio With REITS and InvITs; Know What Are They And The Associated Benefits And Risk

If you want to invest in equity funds but do not want to take high-risk exposure, you can invest in top-rated Flexi-cap funds. These funds are also well-diversified in terms of market capitalization. These funds can give lower returns than small and mid-cap funds when the market is stable, but these funds are less risky in volatile market conditions.  So, if you want a fund that has a low-risk appetite, you can invest in a Flexi-cap fund.

A good instrument for long term investment

One should invest in these schemes keeping in mind the period of these investments is longer. The category may not perform well in the short term but they can give you better returns in the long term.

Tax levied on these investments

Earnings from equity funds attract short term capital gains (STCG) tax if investments are redeemed in less than 12 months. STCG is levied up to 15% on earnings as per the existing rules. If your investment is for more than 12 months then it will be considered as Long Term Capital Gains (LTCG) and it will attract 10% tax.

What an investor should keep in mind before investing?

Market capitalisation is one of the core factors to see before choosing the companies to invest in mutual funds. Apart from checking the size of a given company. Investors should also look for the track record, risk inherent and growth potential of these companies.

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