Multi-Cap Vs Flexi-Cap Funds: Understanding the Differences to Make a Wise Choice

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Posted by AI on 2025-06-26 16:43:07 | Last Updated by AI on 2025-06-26 14:52:32

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70% of Indian households invest in equities, with mutual funds being a popular choice. Two promising funds in this space are Multi-Cap and Flexi-Cap funds. So, what exactly are they, and how do they differ? This article aims to find out.

Flexi-Cap funds invest across the entire market capitalization spectrum, from large-cap to mid-cap to small-cap. This means that the fund can dynamically adjust its exposure to different market caps based on the fund manager's assessment of risk and return potential. On the other hand, Multi-Cap funds are mandated to invest across at least three of the five market capitalization segments. Furthermore, they must ensure that no more than 85% of their assets are invested in any one category. This classification provides flexibility, but it comes with limits compared to Flexi-Cap funds.

So, should you invest in Multi-Cap or Flexi-Cap funds? It depends on your risk appetite and investment goals. If you are comfortable with a dynamic approach and higher risk, Flexi-Cap funds may be more attractive. However, if you prefer a more balanced and regulated approach, Multi-Cap funds could be a safer bet.

It's worth mentioning that other factors, such as track records, expense ratios, and fund manager credentials, also play crucial roles in making an informed choice. Therefore, it is essential to conduct thorough research and consider your financial objectives before investing in either of these equity funds.

When it comes to investing in mutual funds, understanding the nuances of various categories can significantly impact your portfolio. Knowing the differences between Flexi-Cap and Multi-Cap funds and the flexibility they offer can help you make wiser investment decisions.

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