Multi cap funds invest minimum 25% in each category of large, mid and small cap stocks.
Flexi-cap funds give flexibility to the fund manager to invest in equity stocks in various proportions across large, mid and small cap companies.
Multi cap fund portfolio is pre-defined by SEBI whereas flexi cap funds give flexibility to fund manager to reduce exposure to mid and small cap companies. Main difference between multi cap and flexi cap fund is the varying portfolio composition of mid and small cap sector.
Different risk adjusted return exists between multi cap and flexi cap funds. Investor should be aware of clear demarcation between multi cap and flexi cap funds.
Investors to reconsider suitability of multi-cap funds invested prior to regulatory distinction. The regulatory distinction between multi-cap and flexi-cap funds got into effect from 1st February, 2021.
Allocation to multi cap and flexi cap funds depend on investor risk profile and time horizon of financial goals. Both multi and flexi cap funds are for long term period with varied risk adjusted return.
Flexi cap funds should form part of core portfolio for an investor. Generally, flexi cap funds are best suited for all category of investors.
