IIFL mutual funds have launched Flexicap Fund that opens for subscription on 8th May, 2023. It’s an open-ended fund that invests across market capitalization of stocks i.e., large caps, mid-caps, and small caps. Currently, we already have several flexicap mutual fund schemes that generated up to 18% annualised returns in the last 5 years. Should you invest in the IIFL Flexicap NFO? What are the risk factors an investor should consider before investing in such Flexicap funds?
IIFL Flexicap Fund – NFO Issue Details
Here are the NFO issue details.
|Scheme reopens for continuous purchase/sale||Within 5 business days|
|Minimum Lumpsum||Rs 1,000|
|Minimum SIP||Rs 1,000 for 6 months|
|NAV of the fund||Rs 10 during NFO period|
|Exit Load||1% for redemptions within 1 year|
|Risk||Very High Risk|
|Benchmark||S&P BSE 500 TRI Index|
|Fund Manager||Mr Mayur Patel|
What is the investment objective of IIFL Flexicap Fund NFO?
The investment objective of the scheme is to generate long-term capital appreciation by primarily investing in equity and equity related securities across the entire market capitalization range and investing the remaining portion in debt and money market instruments.
However, there can be no assurance or guarantee that the investment objective of the scheme would be achieved.
What is the allocation pattern in this fund?
This fund invests pattern is as follows:
|Type of instruments||Min %||Max %||Risk Profile|
|Equity or *Equity Related Instruments across
|Listed Preference shares||0%||10%||High Risk|
|Debt Securities and Money Market Instruments||0%||35%||Low to Moderate Risk|
|Units issued by REITs & INvITs||0%||10%||Moderately high risk|
Why to invest in IIFL Flexicap Fund NFO?
Here are a few reasons to invest in this fund.
1) Diversification: Flexicap mutual funds offer a diversified portfolio of stocks across different sectors and market capitalizations. This helps in spreading out the risks of investment and helps investors to reduce the impact of market volatility.
2) Potential for higher returns: Flexicap funds have the flexibility to invest in companies across different market capitalizations, which provides the potential to generate higher returns compared to investing in a particular segment of the market.
3) Flexibility: Flexicap funds are flexible and can adjust their portfolio composition based on the market conditions, which allows fund managers to take advantage of market opportunities and optimize returns.
4) Alignment with market trends: The flexibility of the fund allows it to respond quickly to changes in market trends and capitalize on the emerging investment opportunities.
Major risk factors you should consider before investing in such funds
One should consider some of these risk factors / negative factors before investing.
1) Volatility: Since flexicap funds invest in companies of all sizes, they are exposed to market volatility, which can impact returns in the short term.
2) Higher risk: As compared to large-cap or mid-cap funds, flexicap funds are relatively higher risk, due to their exposure to small-cap stocks and untested companies.
3) Liquidity risk: Flexicap funds may have higher liquidity risk due to their exposure to small-cap stocks and may face challenges in selling such stocks in a volatile market.
4) High risk instruments: This fund would invest in equity derivatives preference shares and REITs and InvITs which are riskier.
5) Investors should read scheme information document (SID) for complete risk factors of the scheme.
How is the performance of existing Flexicap funds in India?
Below is the list of flexicap mutual funds and their performance in the short term, medium term and long term.
|Scheme Name||1 Yr||3 Yrs||5 Yrs||10 Yrs|
|Quant Flexi Cap Fund||8%||44%||19%||21%|
|Parag Parikh Flexi Cap Fund||11%||32%||18%||–|
|PGIM India Flexi Cap Fund||1%||31%||15%||–|
|HDFC Flexi Cap Fund||13%||33%||14%||16%|
|JM Flexi Cap Fund||12%||27%||14%||17%|
|Canara Robeco Flexi Cap Fund||4%||24%||14%||15%|
|Union Flexi Cap Fund||4%||27%||13%||13%|
|Franklin India Flexi Cap Fund||6%||31%||12%||16%|
|DSP Flexi Cap Fund||5%||24%||12%||16%|
|Axis Flexi Cap Fund||-1%||18%||12%||–|
|Edelweiss Flexi Cap Fund||7%||27%||12%||–|
|Kotak Flexi Cap Fund||7%||24%||12%||17%|
|UTI Flexi Cap Fund||-5%||23%||11%||15%|
|SBI Flexi Cap Fund||4%||26%||11%||17%|
|IDBI Flexi Cap Fund||3%||25%||11%||–|
|Aditya Birla Sun Life Flexi Cap Fund||3%||25%||10%||17%|
|HSBC Flexi Cap Fund||4%||26%||9%||15%|
|LIC MF Flexi Cap Fund||4%||18%||9%||10%|
|Bandhan Flexi Cap Fund||3%||21%||8%||14%|
|Taurus Flexi Cap Fund||-1%||20%||6%||10%|
|Motilal Oswal Flexi Cap Fund||2%||17%||4.5%||–|
Should you invest in IIFL Flexicap Fund NFO?
IIFL Flexicap Fund NFO invests in various market capitalization i.e., in large cap, mid cap and small cap stocks in India.
While large cap component provides stable returns, the midcap and smallcap segment has the potential to generate high returns. Such funds can act like diversification of portfolio to investors.
On the other side, its exposure to midcap and smallcap segment are high risk. There are a few flexicap mutual funds that generated just 4.5% annualised returns and few below bank FD returns in last 5 years, hence there is no guarantee that this new fund offer would deliver high returns.
High risk investors who want to try and test with new funds can invest in this scheme for over 5 years tenure. Otherwise, one can invest in existing top performing flexicap mutual funds that have already proven in various market cycles.
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