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Flexi Cap Mutual Funds vs Multi Cap Mutual Funds – Where to Invest?

Flexi Cap Mutual Funds is a newly introduced category by SEBI. This newly created category offers flexibility for market cap selection as per the name. As per the mandate, the scheme needs to invest at least 65% of its corpus in equity. The fund manager has the freedom to invest corpus. The fund manager can invest a corpus across capitalization (large-caps, mid-caps, and small-caps) without any restriction/cap. This fund is also known as a dynamic equity scheme.

The Flexi cap fund category is similar to the old multi-cap fund. In old multi cap fund minimum, 65% investment in equity was mandatory. There were no restrictions on other market-caps on the remaining fund. The old multi cap was changed where SEBI introduced a mandate to invest 25% each in mid cap and small cap stocks.

Let’s compare Flexi Cap Mutual Funds and Multi Cap Mutual Funds side by side.

What are Flexi Cap Mutual Funds?

Flexi Cap is an open-ended dynamic equity scheme investing across large cap, mid cap, small cap stocks. The condition is kept that minimum investment in equity and equity-related instrument should be 65% of total assets. Complete flexibility is given to the fund manager for investing funds. The Asset Management Company (AMC) has the liberty to choose a suitable benchmark for each Flexi-Cap scheme.

The fund houses can convert existing schemes into Flexi-Cap scheme subject to compliance as per SEBI guidelines.

What are Multi Cap Mutual Funds?

Multi Cap is a true multiple capitalization fund. Mutli Cap fund invests at least 75% of its total assets in equity and equity related instruments.

In this category of fund, it is mandatory to invest at least 25% of the corpus in each large-cap, mid-cap, and small-caps. The new changes in the multi cap mutual fund category are introduced recently by SEBI. The fund manager is forced to invest a percentage of funds in mid-cap, large-cap, and small-cap despite of non-performance.

Flexi Cap vs Multi Cap Mutual Funds

Let’s Compare Flexi Cap and Multi Cap Mutual Funds Side by Side.

Flexi Cap vs Multi Cap

Which Mutual funds to select for Investment – Flexi Cap or Multi Cap?

Which fund to select for Investment – Flexi Cap or Multi Cap? Well, the reorganization of the fund and introducing flexicap category is a very good step by SEBI. It will help the investor in making the correct choice of the fund as per the fund label.

If investors want to have balance exposure across market capitalization, they can go for multi cap fund category. On the other hand, if the investor has full confidence on the fund manager capacity and looking for higher returns they can opt for newly launched flexicap funds. A newly launched flexicap funds seem to be better as it offers true flexibility to the fund manager.

Shitanshu Kapadia
Shitanshu Kapadia
Hi, I am Shitanshu founder of moneyexcel.com. I am engaged in blogging & Digital Marketing for 10 years. The purpose of this blog is to share my experience, knowledge and help people in managing money. Please note that the views expressed on this Blog are clarifications meant for reference and guidance of the readers to explore further on the topics. These should not be construed as investment , tax, financial advice or legal opinion. Please consult a qualified financial planner and do your own due diligence before making any investment decision.