Stock market Investors’ interest in mutual funds has not decreased amidst the instability released in. Due to this, thousands of crores of rupees are being invested in different mutual fund schemes through SIP every month. Investments in large-caps, flexi cap funds and multi-cap funds have increased rapidly due to increasing number of investors. The question arises between all this that a small and new investor should invest in which of the Flexi Cap or Multi Cap Mutual Fund? Who would be better in terms of risk and return? Let’s answer all your questions.
Flexi Cap vs Multi Cap Fund
- It is mandatory for the Flexi Cap fund to invest the total assets in at least 65 percent of equity and equity related instruments.
- At the same time, multi -cap funds have to invest at least 75 percent of their total amount in equity.
- Flexi cap fund managers have the right to invest in large-cap, mid-cap and small-cap stock.
- In contrast, multi-cap fund managers have to maintain a minimum of 25 percent investment in each in large-cap, mid-cap and small-cap segment.
Investing in which beneficial
In the existing global market environment filled with uncertainty, the portfolio with high allocation in large-cap and mid-cap stocks is in better position to provide stability. Large-cap share provides flexibility and stability, while mid-cap stocks provide moderate growth capacity. On this basis, Flexi Cap Funds are more perfect for new investors, as they allow fund managers to bend the portfolio towards relatively stable segments. Flexi cap funds are generally considered less risky than multi -cap funds. In contrast, multi-cap funds may look more suitable due to similar investment in large-caps, mid-cap and small-cap stocks, but the risk increases.
For investors with high risk -taking ability but limited investment in equity, multi -cap funds can be a more suitable option, as they provide diverse investment in all market capitalizations regardless of existing market conditions. In contrast, low -risk investors who want participation in equity should go towards Flexi Cap Fund.
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