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What are flexi-cap funds? Should I invest in the same? - Radhika Deshmane
Flexi-cap funds are a newly introduced category of equity mutual funds by the Securities Exchange Board of India (SEBI). They predominantly invest across various market capitalisations such as large-cap, mid-cap and small-cap. These funds have the freedom to allocate portfolios in any segment and market capitalisation without any restriction unlike multi-cap funds. After modifying the characteristics of multi-cap funds, which led to a new category of the scheme, most multi-cap funds have been re-classified into flexi-cap funds.
The investment decision of whether to invest in these funds depends on what is your risk appetite, investment horizon and expected returns. As these funds are equity-oriented schemes of mutual funds they come with a high risk factor. Ideally, an investor should invest for at least 5-7 years in order to receive inflation-beating returns. Flexi-cap funds will only be suitable for you if you have a higher risk appetite and long investment horizon. The following table depicts the top three flexi-cap funds based on three-year and five-year returns.
Should I invest in BNP Paribas Large-Cap Fund?
- Susmit Deo
Large-cap mutual funds are equity-oriented schemes offered by mutual funds. They predominantly invest a substantial portion of their assets in big businesses. Large-cap funds are the first to the hundredth company in terms of full market capitalisation. These funds invest 80 per cent of their total assets in equity and equity-related instruments. BNP Paribas Large-Cap Fund is one of the good performing funds which comes under the high risk category as it is an equity-oriented scheme.
The benchmark of this fund is NIFTY 50 TRI and has Rs 1,212 crore assets under management as of July 31, 2021. The risk label of the fund is very high. The standard deviation of the fund is 19.21 versus 18.35 of the average category and the beta of the fund is 0.87 versus 0.82 of the average category. The figure indicates clearly that this fund is risky. The following table depicts the three-year and five-year returns along with benchmark returns.
The fund has been outperforming its benchmark in the three-year period since inception but hasn’t delivered returns over five years. If you have an investment horizon of five years and above then you can consider investing in this fund.