NFO Update: Nippon India Flexi Cap Fund

Nippon Life India Asset Management (NAM India), asset manager of Nippon India Mutual Fund (NIMF), announces the launch of Nippon India Flexi Cap Fund.  

The new fund offer opens for subscription on July 26 while it will close on August 9, 2021. This fund falls under the recently created category of ‘Flexi-cap’. The fund will be benchmarked against NIFTY 500 TRI. The minimum investment required is Rs 500 and in multiples of Re 1 thereafter.  

Objective: It is an open-ended dynamic equity scheme that seeks to create long-term capital appreciation by investing in a diversified portfolio across large, mid, and small-caps based on market view and relative attractiveness.  

Strategy: Nippon India Flexi Cap Fund will apply bottom-up stock selection and appropriate allocation approach to identify opportunities in potentially high growth themes. Presently, the fund will have a bias towards domestic recovery themes with investments across key areas like beneficiaries of consolidation due to technology or regulation, ‘back to normal’ or business normalisation and new business models, which thrive on disruption.  

While the fund will attempt to create alpha through bottom-up stock selection and appropriate allocation to potentially high growth themes, it will maintain reasonable allocations to established leaders. Accordingly, for large-caps exposure, the deviation will be capped at 50 per cent from the benchmark weight (NIFTY 500 TRI). Within large-cap, the fund will maintain lower deviation in mega-caps, active divergence within the rest of large-cap basket while in mid and small-caps, the focus will be on core growth and new-age businesses. 

The fund will be managed by Manish Gunwani, CIO - Equity Investments along with Dhrumil Shah, Varun Goenka & Nikhil Rungta (Co-Fund Manager) and Kinjal Desai, Fund Manager - Overseas.  

In the last one, this category on average has generated return of 51.63 per cent compared to the large-cap category that generated returns of 45.86 per cent during the same period. So, Flexi-cap funds have definitely generated returns better than the large-cap funds; however, when compared to category return of large & mid-cap, they have underperformed despite Flexi-cap funds having exposure to small-cap stocks. At the end of June, Flexi-cap funds on average have 7.5 per cent exposure to small-cap stocks compared to 4.4 per cent exposure that large & mid-cap funds have in small-cap. Even if we take long period annualised returns of these two categories, we would observe that large & mid-cap category has always performed better than the Flexi-cap category.