In the background of the present atmosphere, flexibility has taken on new which means. Companies are proactively altering their processes and policies. Work from home has turn out to be the new normal, and virtual meetings and schooling are increasing on every person. Do you assume that all of this would have been probable if individuals and organisations have been rigid? If they have been not versatile adequate to respond to the altering atmosphere?
Most most likely not. Flexibility equals chance. The only way we can advantage from new and emerging possibilities is if we are versatile adequate to grab them. That is the standard premise of Flexicap funds.
Agile is the new mantra
Recently, the Securities Exchange Board of India (SEBI) introduced a new mutual fund category named Flexicap funds. These funds are multi-dimensional in nature. They are necessary to invest a minimum 65% of total assets in equity and equity-connected instruments with dynamic allocation across substantial cap, mid cap, and little cap stocks. This indicates that based on market place situations and possibilities, fund managers have the flexibility to invest in substantial cap, mid-cap, and little-cap stocks, all at the exact same time.
Flexicap funds provide many advantages that can assist you optimise the danger-adjusted returns of your portfolio. Some of these advantages incorporate:
Risk mitigation by means of diversification: We all know that investing across many asset classes can assist us diversify our portfolios and lessen the danger of losses that stem from intense movements in any one asset class. A comparable advantage is offered by flexicap funds as properly. Stocks from diverse market place capitalisations have varying levels of danger. For instance, little-cap stocks are thought of somewhat riskier than substantial-cap stocks. This is mostly simply because substantial-cap stocks are commonly market place leaders and have currently demonstrated their development and earnings prospective. This tends to make them steady.
On the other hand, little-cap stocks are firms that are nonetheless in the early stages of development and have not but demonstrated their development and earnings capabilities. Hence, there is a higher degree of uncertainty in these stocks. Now, in a falling market place, little-cap stocks are most likely to witness a sharper fall compared to substantial-cap stocks. The diversification element of flexicaps guarantees that the losses accrued on little-cap stocks are minimised due to the exposure to substantial-cap stocks. Moreover, in such a situation, flexicap fund managers also have the flexibility to lessen their-little-cap exposure and improve their substantial-cap exposure, if deemed match.
Return optimization: Opportunities come in a variety of shapes and sizes. It pays to be flexibile to invest across sectors and stocks, in order to capitalise upon the a variety of possibilities in the market place. Due to the dynamic and versatile nature of flexicap funds, fund managers can invest across market place capitalisations and leverage emerging possibilities. Further, the potential to invest in substantial-cap, mid-cap, and little-cap stocks indicates that fund managers can develop an investment portfolio that gives a very good mix of stability and development. Investments can be spread across steady substantial-caps and higher-development mid and little-caps.
ICICI Prudential Flexicap Fund: The flexibility that you require
Considering how worth accretive flexicap funds can be, ICICI Prudential Mutual Fund has announced the launch of its flexicap fund. The fund will invest in a mix of substantial-cap, mid-cap, and little-cap stocks and dynamically shift amongst them based on prevailing market place situations, the macro atmosphere, and stock particular possibilities. The fund follows a mix of leading-down and bottom-up method to recognize possibilities across market place cycles and rebalance exposure accordingly.
(By E Chandrasekaran, Founder & MD, ECS Financial Services(INDIA) Private Limited)