Difference Between Flexi-cap & Multi-cap Fund

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In Nov’2020, ‘Flexi-cap’ was introduced as a new category under Equity Schemes and a difference was drawn between Flexi-cap & multi-schemes. While the name may suggest similar strategies, there are key differences between the categories that is imperative for investors to understand.

Key Features:

1. Multi-cap:

  • Mandatory minimum Investment: 25% in large-caps, 25% in mid-caps, 25% in small-caps
  • The Fund manager has limited flexibility (25%) to tilt allocation to particular market capitalization basis market condition
  • In general, Multi-caps are relatively riskier than Flexi-caps due to mandatory allocation to mid and small caps
  • Investors looking for broad exposure across market capitalization can evaluate Multi-cap funds

2. Flexi-cap Funds

  • Flexibility to invest across Market capitalization without any prescribed limits
  • Since there is no mandate to invest across Large, Mid and small-caps, the Fund manager has complete flexibility to tilt allocation to a particular market capitalization basis market condition
  • In general, Flexi-cap funds have higher allocation towards large-caps making it relatively less risky than Multi-cap funds
  • Investors looking for more large-cap tilted portfolio with tactical allocation towards mid & small-caps can evaluate Flexi-cap funds

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully The information provided is generic in nature and is for informational purpose only. Please consult your financial advisor before taking any decision.

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