Adding Flexi Cap funds to your portfolio in the current market situation? Here’s all you need to know

Due to their flexible approach, Flexi Cap funds can stabilise the portfolio during a bear market.

After the Russian invasion of Ukraine, stock markets across the world have become highly volatile. In volatile stock markets, investors usually focus on a diversified portfolio of stocks across market segments for higher risk-adjusted returns.

While investing in mutual funds, for instance, there are various things one needs to figure out — starting from where to invest, when to invest and when to sell which fund.

Flexi Cap funds, experts say, are an investment option that offers value simultaneously while identifying growth opportunities across the market. They invest a minimum of 65 per cent of their assets in equity and equity-related instruments. As the name suggests, the funds have the flexibility to invest across market segments without any restrictions, such as in large-cap, mid-cap and small-cap.

Advantage of investing in Flexi Cap Funds;

  • Flexible – Due to their flexible approach, Flexi Cap funds can stabilise the portfolio during a bear market. They can drastically reduce exposure to riskier market segments and simultaneously raise exposure to large-cap stocks. Additionally, to tap growth opportunities, they raise exposure to mid-cap and small-cap stocks during a broad-based market rally.  
  • They offer Diversified Portfolio – Flexi Cap Funds offer a diversified portfolio that handles stock market volatility over time, as they invest in stocks of different sizes across sectors, industries and themes.

Factors to consider before investing in Flexi Cap funds;

  • Track record of the fund- While investing, try to choose funds that have performed well through both the bull and bear market phases. Additionally, industry experts say one must check the fund portfolio as sometimes Flexi-cap funds follow a conservative approach with a higher allocation towards large-cap stocks.
  • Time horizon – As an investor, you must invest with an investment horizon of at least 5 years, as experts point out these funds usually have a higher allocation towards mid-cap and small-cap stocks.

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