Posted in Finance, Accounting and Economics Terms, Total Reads: 106
Definition: Flexi-Cap Fund
Flexi–Cap Fund is to invest in any company with no restriction of the company’s size. The flexi Cap Fund is thus a mutual fund or hedge fund in which the investment is done in any equity shares of the company across the market. The market capitalization decides the value for a company so in these investment the mutual fund manager can invest in companies with no minimum market capitalization value of the company. This gives the fund holder a wider choice. So the investment can be in the small capitalization companies, medium capitalization companies and large medium capitalization.
Some mutual funds have limit and they don’t invest in companies that are lower than a limit but this investment gives them rights to invest in good investment without considering the market capitalization of that company. The diversification of the portfolio is most important aspect in any investments thus Flexi Cap Fund gives the opportunity to make a good diversified portfolio.
1) Different market equities react differently in different situation so it is necessary to invest in different companies with different market cap.
2) Sometimes the medium capitalization companies do better than the large market capitalization companies so it can give advantage to investors.
3) Somehow the large capitalization value companies remain constant but the medium capitalization and small capitalization companies grow really fast in bull stock market.
4) Medium capitalization companies give higher returns in short period of time than large capitalization so thus people who wants to make profits in short period of time should invest in such companies.
1) Medium capitalization companies are more sensitive to the market so it can have higher risk as well
2) Mutual Funds manager skills is very important, so fund managers play a vital role in deciding where to invest and where not to.