Flexi Funds: A diversification of portfolio at minimum Cost…!!
Diversification is one of the key things in the investment procedures. Investor likes to prefer diversification as it helps in reducing the risk and generate better returns. An investor can choose from a list of different funds such as large, mid or small cap fund to diversify their portfolio. Historically, Large cap or mid cap stocks have performed differently in different market cycle. Each market cycle carries its own risk, an investor can get better returns in one cycle but not in the next one. One such fund which provides protection against the risk of these market cycles is Flexi cap Fund.
Flexi Cap Fund is a mutual fund which invests in stock without any restrictions of the market capitalization. It is a dynamic equity fund which seeks to invest in quality company across different market caps. During the three- and five-year period, Flexi Cap has been a top-quality performer. Across all time frames, the fund has beaten the benchmark, Nifty 500 by a margin of three to eight percentage points. It has completely beaten the category average and its benchmark. It follows a research driven, bottom up strategy which involves more of stock picking based on merit rather than completely focus on sectoral holding. It puts around 65 to 70 percent of its portfolio in large cap stocks and the rest in mid cap or small caps. Let’s look at the top performing mutual funds in this category, according to Paytm:
- L&T Flexi Bond Fund Direct Growth
- UTI Regular Savings Fund Direct-Flexi Dividend
- HSBC Flexi Debt Fund Direct-Growth
- BNP Paribas Flexi Debt Plan Direct-Growth
- Quantum Equity Fund of Funds Direct-Growth
A small investor can also invest in these funds through Flexi SIP. The Flexi SIP Portfolio is like a regular SIP in which a fixed amount of money will be invested on specific dates for a chosen period. This amount will be used to buy units at the NAV prevailing on the date of investment. It allows the advantage of rupee cost averaging in which an investor can buy more units when the price is low and fewer units when the price is higher. There are various advantages of doing Flexi SIP:
- Disciplined Investing:
It allows an investor to invest on a regular basis. It also allows an investor to stay updated with the market trends.
- Rupee cost averaging:
It allows the investor to get the benefits of Rupee Cost Averaging. Rupee cost averaging allows to take maximum benefits of investing by avoiding the unnecessary risk.
- Add and Delete Funds:
Through the Flexi SIP, an investor has an option to add or delete the funds depending upon the market performance. An investor can alter their portfolio according to changing market conditions, which will have an impact on the returns on the longer run.
It provides flexibility to the investors to diversify their portfolio with minimum cost. The flexibility helps the investor to get greater control over their finances.
*Mutual fund investments are subject to market risks. Please read the scheme information and other related documents carefully before investing.