Top Performing Flexi Cap Funds You Can Consider Investing In
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The Securities and Exchange Board of India (SEBI) introduced flexi-cap funds on Nov 6, 2020, keeping in mind diverse investment requirements. It is a new category of multi-cap funds that need to invest a minimum of 65% of its corpus in equity and equity-related instruments.
These are open-ended and dynamic mutual funds that invest across various market capitalisations – small-cap, mid-cap and large-cap. The main objective of these funds is to maximise the long term gains of investors.
Table of contents
- Best Flexi Cap Funds 2021
- Benefits of Flexi Cap Funds
- Risks Involved in Flexi Cap Mutual Funds
- Taxation of Flexi Cap Funds
- Who Should Invest in Flexi Cap Mutual Funds?
- Factors to Consider Before Investing in the Best Flexi Cap Funds
- How to Evaluate the Best Flexi Cap Funds?
- Final Word
- Frequently Asked Questions
Best Flexi Cap Funds 2021
| Top 10 Flexi Cap Funds 2021 | Features |
| UTI Flexi Cap Fund | NAV: Rs. 278.1861 as of Oct 18, 2021 Exit Load for redemption within 12 months from the date of allotment for up to 10 units is nil and 1% beyond 10% of allotted units. No exit load after 12 months from the date of allotment. Expense Ratio: 1.06% Minimum investment amount: Rs. 5,000 5-year aggregate returns as of Oct 19 2021, stand at 19.15%. |
| Navi Flexi Cap Fund | Minimum investment – Rs.1,000 Minimum for SIP – Rs. 500 AUM – Rs.212.90 crore (as of Nov 1, 2021) Expense Ratio: 0.44% |
| PGIM India Flexi Cap Fund | Nifty 500 TR Index Minimum investment of Rs. 5,000 and in multiples of Re. 1 thereafter. A minimum additional investment of Rs. 1,000 and in multiples of 1 thereafter. 10% of the units may be redeemed or switched to other funds within 90 days from the date of allotment. 0.50% exit load in case of switching/redeeming more than 10% of the allotted units. No exit load if redeemed/switched to STP or other hybrid schemes (except Arbitrage Funds). |
| IDBI Flexi Cap Fund | S&P BSE 500 Index 1% for exit (redemption/ switch-out/ transfer/SWP) within 12 months from the allotment date. Minimum investment of Rs. 5000 and in multiples of Re. 1 thereafter. SIP: Monthly: Minimum contribution of Rs. 500/- per month for a minimum of 12 months or at least Rs. 1000/- per month for a minimum of 6 months. Quarterly: A minimum investment of Rs. 1500/- per quarter for a minimum of 4 quarters. |
| Canara Robeco Flexi Cap Fund | NAV as of 18-Oct-2021 is Rs. 238.90 1% exit load for redeeming within 1 year from date of allotment, and nil while redeeming after completion of 1 year from date of allotment. Minimum investment of Rs. 5000 and Re. 1 thereafter. SIP/STP/SWP minimum investment amount of Rs. 1,000 and Rs. 2,000 for monthly and quarterly investment frequency Expense ratio: 0.55% |
| Union Flexi Cap Fund | Expense Ratio: 2.66% Exit load: 1%S&P BSE 200 5-year aggregate return as of Oct 19 2021, is 16.76% Minimum investment of Rs. 1,000 |
| DSP Flexi Cap Fund | Rs. 500 minimum investment and minimum Rs. 500 for additional purchase 1% exit load if redeemed before completion of one year from the date of allotment. NAV: Rs. 70.93 approx. as on 18.10.2021 Nifty 500 TRI Expense Ratio: 1.93% |
| HDFC Flexi Cap Fund | Nifty 500 TRI NAV: Rs. 1,113.23 approx. as on 18.10.2021 Expense ratio: 1.12% Nifty 500 Total Returns Index 1% exit load for all units redeemed/switched before completion of 12 months from the date of allotment and nil thereafter. |
| Franklin India Flexi Cap Fund | Expense ratio: 1.14% NAV: Rs. 1,008.99 approx. as on 18.10.2021 1% exit load for all units redeemed/switched before completion of 12 months from the date of allotment and nil thereafter. Aggregate annualised returns for 5 years stand at 14.31% Minimum investment of Rs. 5,000 and minimum additional purchase at Rs. 1,000 thereafter Nifty 500 |
| Axis Flexi Cap Fund | Exit Load for redemption within 12 months from the date of allotment for up to 10 units is nil and 1% beyond 10% of allotted units. No exit load after 12 months from the date of allotment. Nifty 500 TRI 17.82% aggregate annualised returns over 3 years Rs. 5000 minimum lumpsum investment and Rs. 100 minimum additional purchases thereafter. NAV: Rs. 20.36 |
| Edelweiss Flexi Cap Fund | NAV: Rs. 23.96 as on 18.10.2021 Expense ratio: 2.25% 1% exit load for all units redeemed/switched before completion of 12 months from the date of allotment and nil thereafter. Minimum investment of Rs. 5,000 and in multiples of Re. 1 thereafter. |
Also Read: 10 Large Cap Mutual Funds That Can Be A Part Of Your Portfolio
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Benefits of Flexi Cap Funds
Flexibility
The fund managers have the liberty to invest across market caps – small, medium and large, whichever offers better return potential. Of course, the allocations are done on the basis of several parameters to generate better returns.
Equity strategy
Fund managers can pick stocks from any sector. This gives them the opportunity to diversify the investments and generate maximum returns, safeguarding the portfolio value from market volatility at the same time.
Maximise opportunities across the market spectrum
Fund managers are always on the lookout for opportunities. They assess the market conditions, company financials along with their growth prospects. After taking these factors into consideration, fund managers allocate their investment corpus accordingly to deliver risk-adjusted returns.
Asset Class benefit
As an asset class, equity has the ability to beat market inflation and maximise wealth in the long run. These funds can help investors to achieve their long term financial goals.
Risk mitigation
Another reason to invest in the flexi cap funds is due to the lower risk factor in comparison to other types of equity funds. Fund managers can always capture the best prospects in the market across different sectors, unlike in the case of pure large-cap or mid-cap funds.
Risks Involved in Flexi Cap Mutual Funds
As flexi-cap funds invest in different market cap segments, they strike a balance between risk and volatility. These funds are known to deliver steady returns even during bear market phases due to their well-diversified portfolio.
If the fund manager notices that a particular asset/sector is not performing well over some time, he can change the allocation. Such flexibility allows investors to minimize risks and volatility while getting steady returns.
These investments are ideal for investors with moderate risk appetites who are also looking for steady risk-adjusted returns.
Taxation of Flexi Cap Funds
Per the Income Tax Act, flexi cap funds are equity mutual funds. Here’s how they are taxed:
STCG
Short term capital gains refer to returns from investments held for less than 12 months. These gains are taxed at a flat 15% rate irrespective of your income tax slab.
LTCG
All gains made from investments held for a period of over 12 months come under this category. LTCG of up to Rs. 1 lakh is exempted. That said, long-term capital gains of more than Rs. 1 lakh attract 10% rate without indexation benefit.
Who Should Invest in Flexi Cap Mutual Funds?
For first time investors
Due to their diversified portfolio, flexi-cap funds are ideal for first-time investors in equities. As these investors do not know much about balancing their risks, these funds are an easy investment option.
For long-term capital appreciation
Flexi-cap funds are ideal for investors with a long-term investment horizon of five or more years. Its ability to change the allocations regardless of the market cap makes it one of the best performers in the long run. Moreover, the long-term horizon acts as a cushion against volatility.
For small and mid-cap exposure with lower risk
These funds are ideal for investors who want to invest in small-cap and mid-cap funds but do not have a high-risk appetite.
For investors in a dilemma
Investors who cannot make a decision between large-cap, mid-cap and small-cap funds can invest in flexi-cap funds.
Factors to Consider Before Investing in the Best Flexi Cap Funds
Time horizon
You need to know the purpose of your investment aligns with your object and financials. Flexi cap funds are the most beneficial in the long term, and therefore, it is a suitable option if you have a long term investment horizon.
Risk tolerance
Since the returns of these funds depend on the market scenario and the performance of the companies, there’s considerable risk associated with investments in flexi cap funds. Thus, you need to assess your risk appetite before investing even in the flexi cap funds in 2021.
Expense ratio
The expense ratio is a yearly fee charged by AMCs to cover administrative expenses and other costs related to the maintenance of the fund. Usually, mutual fund schemes with a higher corpus offer a lower expense ratio. It is advisable to select funds with a lower expense ratio to maximise your returns on investment.
Fund performance
It is of the utmost importance that you check a fund’s past performance and track record to get a comprehensive idea about its ability to provide returns. This helps you assess the ability of the funds to perform in different market conditions.
How to Evaluate the Best Flexi Cap Funds?
You can take a look at the following financial ratios to evaluate the best flexi-cap mutual funds:
Alpha
This measures the fund manager’s ability to generate profits during times when the benchmark (Sensex or Nifty) registers a profit. The closer this value is to 1.0, the more is the fund manager’s skills to make profits in a bull market and vice versa.
Sharpe ratio
This refers to the risk-adjusted returns of a specific mutual fund. A higher value indicates the better performance of a fund compared to its peers.
Risk-adjusted returns
These are the returns made by a fund compared to its risk over a period of time. For two funds with the same returns, the one with lower risks will have higher risk-adjusted returns.
Benchmark
It is always advisable to look at a fund’s benchmark to compare its performance. If a fund is doing well, it will constantly outperform its benchmark.
Quality of stocks in portfolio
Check the returns of a mutual fund over time to know the quality of stocks. You can also look at the fund’s industry leadership position and historical performance to evaluate it.
Also Read- What Is ESIP?
Final Word
Flexi cap funds always tend to maximise returns despite market risks in the long run. Therefore, it is ideal for investors who have a long term investment horizon. However, as an investor, you also need to consider your income, your risk tolerance, etc., before investing.
Frequently Asked Questions
Is it safe to invest in flexi cap funds?
Since the performance of the flexi cap funds depends on market conditions, there are certain risks involved. However, these pose a lesser threat than direct equity investments.
What is market capitalisation?
Market capitalisation refers to the total market value of the company. One can compute it by multiplying the total number of outstanding shares of the company by the market price of each share.
Do flexi cap funds come with a lock-in period?
No, flexi cap funds do not have any lock-in period. You can sell your units at your convenience.
How are flexi cap funds different from multi cap funds?
As per SEBI guidelines, flexi cap funds need to invest at least 65% in equity and equity-related instruments. There is no restriction in terms of the allocation across small-cap, mid-cap or large-cap stocks. That said, it is mandatory for multi cap funds to invest a minimum of 25% of their fund corpus in each of small cap, mid cap and large cap categories.
Are investors eligible for tax exemptions under Section 80C of the Income-tax Act, 1961 in the case of flexi cap funds?
No, individuals who invest in flexi cap funds will not be eligible for tax deductions under Section 80C of the Income-tax Act, 1961.
Before you go…
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Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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