Multi-Cap Vs Flexi-Cap Funds: Choosing the Right Fit for Your Portfolio
As equity mutual funds continue to gain traction among Indian investors, understanding the difference between Flexi-Cap and Multi-Cap funds is crucial for informed investment decisions. Experts highlight that the key difference comes down to one word—freedom.
According to Navy Vijay Ramavat, Managing Director at Indira Group, Multi-Cap funds follow a SEBI-mandated structure—requiring a minimum 25% allocation each to large-, mid-, and small-cap stocks. This rule ensures disciplined diversification across company sizes, helping balance performance across market cycles. However, this structure also limits a fund manager's flexibility in responding to market changes, which may increase the risk-reward intensity during volatile phases.
On the other hand, Flexi-Cap funds offer complete flexibility, as long as at least 65% of the assets are invested in equities. Fund managers can adjust allocations based on market conditions—going all-in on large-caps during downturns or shifting focus to mid- and small-caps during rallies. 'My style aligns more with Flexi-Cap," said Ramavat. 'It allows me to move across segments depending on where I see opportunities."
He added that sectors often matter more than market caps, and being nimble across segments creates opportunities—especially for short- to mid-term traders. 'Cash is also a position," he noted, highlighting the importance of timing and allocation.
Echoing this, Manish Kumar Goyal, Chairman and Managing Director at Finkeda, emphasised that Multi-Cap funds are ideal for investors who seek stable and balanced diversification with a rule-based approach. 'Flexi-Cap funds are more suitable for those who want dynamic allocation based on market trends," he said.
In summary:
Multi-Cap = Stable, rule-based allocation across all caps
Flexi-Cap = Dynamic, market-driven flexibility
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