An organisation that manages mutual funds will hire a fund manager to invest all investors’ money carefully. This person is in charge of completing thorough market research, putting investing strategy into practice, managing investments, and making trades.
If you intend to invest in actively managed mutual funds, you should know what a fund manager does and how having one can benefit you.
What are Flexi-cap funds?
A flexible-cap fund enables investors to vary their investment holdings among businesses with various market capitalizations, reducing volatility and risk.
Flexi-cap funds may invest in any firm regardless of the company’s market capitalization, like mid-cap or small-cap funds that concentrate on equities based on market capitalization.
Benefits Of Flexi-cap Fund
- Flexi-cap funds allow fund managers to invest in large, midsize, and small-cap business stocks in various industries and market capitalizations.
- The capacity to balance risk and return is improved through flexibility in asset allocation. Fund managers monitor market circumstances to maximize profits and purchase and sell equities with a range of market caps.
- Flexi cap funds’ diverse portfolio contributes to more excellent capital protection.
- Flexi-cap funds can outperform market inflation and produce excellent returns over the long term because they are equity funds. As a result, these funds can aid in achieving your long-term financial objectives.
How do these funds work?
The Flexicap category fund managers are unrestricted in their ability to invest in businesses of any size. Fund managers may invest in tiny businesses with high growth rates to profit from strong growth. They seek businesses with robust cash flows, excellent return ratios, and flat balance sheets.
Fund managers’ investment choices are unaffected by changes in how equities are classified. A fund manager might adhere to his conviction bets and concentrate on fundamentals for long-term gain. Fund managers can better distribute investments based on their assessment of the relative attractiveness of market sub-segments thanks to the flexi-cap scheme.
Who Should Invest In Flexi-Cap Funds?
For long-term investors with some investing experience, Flexi-cap funds are appropriate.
It is appropriate for investors with a five to seven-year investment horizon because it offers better returns and outperforms inflation. However, they ought to be ready for potential downs and ups in their investments.
Flexi-cap fund taxation
Flexi-cap funds are taxable as equity-oriented plans under the Income-tax Act 1961, just like any other equity fund. Depending on the slab rate, profits from a Flexi-cap scheme are taxed at a flat rate of 15% within a year.
How are Flexi-cap funds different from Multicap Funds?
The 25-25-25 rule, which requires multi-cap funds to maintain 25% of their portfolios in large-, mid-, and small-cap equities, sets minimum investment requirements across market cap divisions.
The “Flexi Cap Fund” category, which will be presented as a dynamic equity fund with no limits or bias towards any market cap segment, was introduced by SEBI to provide AMCs some freedom.
As the Flexi-cap fund offers total freedom while investing throughout market cap segments, these funds would continue to adhere to their investment strategy under the new category.
Investors may benefit from investing in mutual fund schemes by knowledgeable and skilled fund managers. These managers’ investment methods and knowledge generate high returns for investors. However, before selecting your portfolio manager, you must also consider the fee ratio, expertise and experience, the types of funds they invest in, investment behaviour, and other aspects.