Investment in Mutual Fund: The outbreak of the corona epidemic is gradually decreasing and the lockdown is also gradually being removed. The slowdown in the economy due to the lockdown is also fast curtailing and domestic and foreign institutional investors are investing diligently in the stock market. The stock market remains bullish and given the continuous improvement in the situation, it can be expected that this momentum will continue in this way as well. We have seen that investing in equity mutual funds has proved beneficial for wealth creation in the long run.
Earning profits from investing through mutual funds
There is definitely a possibility of ups and downs in the stock market in the coming time, but from a long-term perspective, this is a suitable time to invest in the stock market. While investing in the stock market can expect good returns in the long run, there are risks involved, so participation in the stock market through mutual funds can prove beneficial because mutual funds are managed by skilled people. . But it is also important to understand that not all mutual funds are the same, rather they are divided into different categories. Today we will tell you about one of these Flexi Cap category.
what is flexi cap category
Based on the size of the companies held in the portfolio of an equity fund and the investment strategy, they are classified into large cap, mid cap, small cap, flexi cap, multi cap and focused fund etc. As per SEBI guidelines, it is mandatory for a flexi cap fund to invest at least 65 percent in the stock market, but it is the fund manager who decides what percentage to invest in which type of market cap stocks. The advantage of this is that the fund manager can periodically revise the portfolio according to market movements, thereby limiting the risk.
Such was the performance of funds between 2009 and 2013
Between 2009 and 2013, while the Nifty 100 Total Return Index, an index of large cap stocks, gave a return of 131 percent, the Nifty Midcap 150 Total Return Index delivered 150 percent and the Nifty Small Cap 250 TRI returned 112 percent. Between 2014 and 2017, these returns were 86 percent, 194 percent and 203 percent respectively. If we talk about the year 2018 to 2020, then while the large cap index registered a profit of 34 percent and the mid cap index 11 percent, the small cap index registered a loss of 14 percent. This shows that stocks with different market caps outperform others at different times.
Importance of Flexi Cap Category
Large cap, mid cap and small cap funds as their name mainly invest in stocks of large companies, mid cap companies and small companies. Whereas flexi cap funds can invest in stocks of companies with more than one type of market cap, that is, this category of funds can be invested in all types of large cap, mid cap and small cap stocks. Also, flexi cap funds can invest in all sectors, giving unlimited options to the fund manager.
Know About Mahindra Manu Life Mutual Fund
Recently Mahindra Manu Life Mutual Fund has also launched the NFO of Flexi Cap Fund named Mahindra Manulife Flexi Cap Scheme. Mahindra Manulife Mutual Fund has designed a different structure for the selection of shares in this scheme, on the basis of which the difference between the actual price and the market value of a share will be known. Often shares are bought and sold at prices higher than their actual value. The risk in such stocks is high because if the stock market falls, then its impact on such stocks is more.
The methodology adopted by Mahindra Manulife Mutual Fund for valuation of stocks can be expected to yield high returns with limited risk. One can start investing in this fund with a minimum of Rs 1000. This NFO will be open for investment till August 13. This is an open-ended scheme, so after the closure of NFO, from August 25, the facility of investing and withdrawing money in this scheme will start once again. This fund is suitable for lump sum investment and SIP. One can invest in this fund with a tenor of five years or more. Flexicap is a better option for investors who want to invest in a diversified fund.
The author of this article is Pankaj Mathpal, a Certified Financial Planner and CEO of Optima Money Managers.
Note: Mutual fund investment is subject to risk rules and investors should consult their financial planner before investing in any kind of scheme.
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