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What are Flexi Cap Funds?

By Anurag Dixit

12th May 2022

2 mins read

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“I should have bought more of that stock”, “I should have waited some more”, or “I wish I had some capital to buy that stock”. Sounds familiar? Just some statements investors yell at 9:15 daily.

Truth be told, it is hard to time the market and more so for an investor like you and me who don’t make a bread tracking these charts, and when the market seems to be on a rollercoaster, riding alone would be unadvised.

This is where the angels called Fund Managers come in with their maths and business prowess to make sure our paisa turns to rupee in due course of time. However, the problem with conventional Mutual Funds is that they more or less restrict the freedom in decision making of the Fund Managers. Let's see how Flexi Cap funds resolve this problem.

Flexi Cap Funds

These funds invest across the market, i.e. Small-Cap, Large-Cap, Mid-Cap. Although it seems analogous to multi-cap funds, the concept has a crucial difference. Multi-Cap funds require at least 25% of the funds invested in each market capitalisation spectra. In contrast, the Flexi-Cap funds only need 65% of the funds invested in “the market” regardless of the proportions invested in various caps. The fund manager gauges growth potential rather than market capitalisation to identify the asset to be invested in.

Advantages of Flexi Cap Fund

  • As with many other funds, the Flexi fund diversifies the investment greatly, thus lowering the risk.
  • The Flexi cap also protects one's investment against a sectoral as funds are not necessarily invested in a particular sector. Rather companies with growth potential are identified.
  • It also saves the investors the hassle of choosing stocks or investment sectors and themes.

Disadvantages of Flexi Cap

  • The fund heavily relies on the fund managers' assessment rather than pre-established benchmarks and thus may be unfavourable for some investors.

Let's take a look at an example of a Flexi cap fund:

Aditya Birla Sun Life Flexi Cap Fund

This is one of the funds available for investment on Spenny's platform.

  • Expense Ratio - 1.68%
  • Exit Load - 1 % if redeemed before 90 days
  • Taxation - Taxed same as equity funds

The fund invests in all three market capitalisation in various proportions:

  • 59.55% in Large Cap
  • 21.49% in Mid Cap
  • 4.13% in Small Cap

This was some information on this model of a mutual fund. We hope this helps next time you invest.

Till then, Stay Safe! Invest Safer!!


What is meant by market capitalisation?

Market capitalisation simply refers to the product of the number of outstanding shares of a company and the price per share.

E.g., If a company has 100 outstanding shares and each share is valued at ₹50. The market capitalisation of the company would be 100×₹50, i.e., ₹5000.

How are companies classified based on their market capitalisation?

The companies are classified as Large Cap, Mid Cap or Small Cap.

  • Large Cap - Market Cap >₹20,000 crore
  • Mid Cap - Market Cap ₹5,000 crore - ₹ 20,000 crore
  • Small-Cap - Market Cap < ₹ 5,000 crore

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Made with ❤️ in India