Multi Cap vs Flexi Cap; Which is Better?

As Mutual Funds are categorised into “Large Cap”(which invests in Large Cap Companies)”Mid-Cap”(which invests in Mid-Sized Companies)and “Small Cap”(Which invests in Smaller Companies) Upto 2020 November, there exists “Multi-Cap” Category which allows to invest across all the fund categories

But on November 6th SEBI announced an circular by introducing “Flexi-Cap” Category for the 1st time in India.

SEBI modified “Multi-cap” category which made it to allocate “equal” Proportions to all categories(25% to Large Cap,25% to Mid Cap,25% to Small Cap at least, and the remaining 25% in debt instruments)as per the schemes objective.

As Per SEBI Guidelines “Flexi-Cap” Funds can invests “Flexibly across all market caps”.

But the sudden amendment on Multi-Cap Funds worries the interests of the investors and the fund houses

Up on Fund Houses request, SEBI allows all the Fund Houses to Convert their “Existing” Multi-Cap Funds to “Flexi-Cap” Funds by changing the fundamental attributes of their schemes

Now, You are aware of difference between Multi Cap and Flexi Cap Funds-

1.Those who wants to invest across the market sizes flexibly as exercised by the fund manager, one can opt for “Flexi Cap” Funds

2.Those who want to allocate ‘Equal” Proportionals to all market-caps may invest in “Multi-Cap” Funds.

But do look at your Fund’s objective and whether it is converted into Flexi Cap or not. Almost 75-80% of the fund houses converts their existing “Multi Cap” schemes into ‘Flexi-Cap” Funds

If you are willing to continue in Flexi-Cap, You have to do nothing; But if you wish to invest across all market-caps, consider ‘Multi Cap” Funds. Do check with your fund house on the current status of the scheme.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: