What are Flexicap Funds?
The market regulator, SEBI had vide it circular dated November 6, 2020, introduced a new category of equity mutual fund scheme called ‘Flexicap Fund’. These are open-ended dynamic equity schemes investing across large-cap, mid-cap and small-cap stocks. The minimum investment in equity and equity-related instruments will be 65% of the total assets.
How do these funds work?
The fund managers of Flexicap category are allowed to invest in companies of all sizes without any restrictions. Fund managers can invest in high-growth, small-sized companies to benefit from high growth. They look for companies with strong balance sheets, relatively attractive return ratios and strong cash flows Despite changes in the classification of stocks, fund managers’ investment decisions remain intact. A fund manager can stick to his conviction bets and focus on fundamentals for long term benefit. Flexicap scheme helps fund managers gauge the relative attractiveness of markets’ sub-segments and allocate investments accordingly.
