Money Guru: Flexi Cap or Multi Cap Fund? Which one is better? Expert decodes

Money Guru: Everyone wants better returns with less risk. But when it comes to investing, the choice of fund matters a lot. If you are choosing between Flexi Cap Fund or Multi-Cap Fund, then it is important to understand what Flexi Cap Funds or Multi-Cap Funds are? Which fund will prove to be better? 

Expert Col Sanjeev Govila (Retd.), CEO, Hum Fauji Initiative explained this in a chat with Swati Raina on a popular TV Show Money Guru.

What is Flexi Cap Fund?
Flexi cap funds are the type of funds in which one can invest in different modes be it large-cap, mid-cap, and small-cap. It is an open-ended dynamic equity scheme. Apart from that, there is freedom in choosing the category fund. But the category must have at least 65% investment in equity.

Benefits of Flexi Cap
There are many benefits of Flexi Cap. For example- Flexi Cap reduces the risk of market volatility. Apart from this, it becomes easy for the fund manager to change the market cap exposure and also makes it easier for the investors to balance the portfolio. There is also a beneficial scheme for small investors.
It helps to invest in good stocks. It also gives the advantage of better returns with less risk.

What is Multicap Fund?
Multicap funds are diversified mutual funds. In this, it is necessary to invest at least 25% in large, mid, and small caps. It is also necessary to invest 65% in the same equity and equity-related instruments. Apart from this, a maximum of 25% can be invested in the debt, and money market. They keep the portfolio of stocks diversified.

Benefits of Multicap Fund
Multicap funds also have their own specialty. In this, the fund manager has flexibility. One can invest in large, mid, and small caps. 80% of large-cap funds should be invested in top 100 stocks. Moreover, over the long term, the risk is less in multi-cap funds. The risk is also less as compared to smallcap, and midcap funds.

What is the difference between Multi cap and Flexi cap?
25% investment is required in all three multi cap - large, mid, and small cap.
There is no fixed allocation investment rule in Flexi Cap.
There is no investment limit in Flexi Cap across all three caps.
In Flexi cap, 65% investment is required to be in equities.
Fund managers can make an allocation to equities as per the requirement.

Sanjeev Govila's stock
P Parikh Flexicap Fund
PGIM India Flexi cap Fund
Canara Robeco Flexi Cap Fund
UTI Flexi Cap Fund
SBI Multicap Fund
Axis Multicap Fund