What are the 5 key differences between multi-cap and flexi-cap mutual funds? This category offers higher returns.

News Topical, Digital Desk : Mutual funds come in several categories. These include multi-cap mutual funds and flexi-cap mutual funds. The key is that both are equity funds that invest across different market capitalizations. Let's explore the differences between the two.

Multi-Cap Funds:

• Multi-cap funds have to invest at least 25% in large-cap, mid-cap and small-cap companies
• This fund offers stability and diversification
• Investing in multi-cap funds gives you the opportunity to invest across different market capitalizations

Flexi Cap Fund:

• Flexi Cap Fund has no allocation restrictions and is free to invest across any market capitalization
• This fund offers greater flexibility and the potential for higher returns
• In flexi cap funds, the fund manager has more discretion and can invest according to market conditions

There are 5 major differences between these two funds:

• Allocation: Multi-cap funds are required to invest at least 25% in large-cap, mid-cap and small-cap companies, but there is no such limit for flexi-cap funds.
• Diversification: Multi-cap funds offer greater diversification, while flexi-cap funds offer greater flexibility.
• Returns: Flexi-cap funds offer higher returns, while multi-cap funds offer more stability.
• Risk: Multi-cap funds are less risky, while flexi-cap funds are more risky.
• Fund manager-dependent: In flexi-cap funds, the fund manager has greater discretion. This means they can increase or decrease investments in a category as per their discretion, whereas in multi-cap funds, the fund manager cannot do this.

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