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PLANNING OF CHOICE BETWEEN MULTI-CAP AND FLEXI-CAP FUNDS

Multi-cap funds maintain a diversified portfolio across market in divisions of capitalization, making the process less hazardous in comparison to Flexi-cap funds. However, Multi-cap funds have smaller potential return. On the other hand, Flexi-cap funds have no such constraints, providing fund managers more freedom to invest in firms that they feel to provide potential at utmost level. As a result, flexi cap funds offer larger return potential, but they also have higher risk.

The optimal sort of fund for an investor is determined by the objectives of investment as well as risk-tolerance. A Multi-cap fund may be suitable alternative for an investor if anyone wants a fund that offers a diversified portfolio of equities with minimal risk. A flexi-cap fund may be a better option for an investor if he or she is ready to take on greater risk in exchange for the possibility of larger rewards. It is critical to select a fund on the basis of investment philosophy with respect to sharing. Multi-cap and flexi-cap funds may have distinct investment philosophies – so it is vital carry out the home-works properly before selecting a fund. As previous success cannot be the guarantee of future outcomes, thus, it is required to examine the fund’s previous performance to see how it has fared in various market situations. Again, expense ratio is the percentage of the fund’s assets utilized to cover the costs of fund’s management. Higher expense ratio indicates that more amount of money is invested in the markets.