Bajaj Finserv Flexi Cap Fund NFO – Issue Details, Risks and Review

Bajaj Finserv is launching its first equity fund, the Bajaj Finserv Flexi Cap Fund NFO. This open-ended fund offers investment opportunities across various market capitalizations, including large caps, mid-caps, and small caps. Over the past five years, several flexicap mutual fund schemes have generated annualized returns of up to 18%. Considering these factors, should you consider investing in the Bajaj Finserv Flexi Cap NFO? Additionally, it’s crucial to understand the risk factors that investors should consider before investing in such Flexi Cap funds.

Bajaj Finserv Flexi Cap Fund – NFO Issue Details

Here are the NFO details.

NFO Opens 24-Jul-23
NFO closes 07-Aug-23
Scheme reopens for continuous purchase/sale Within 5 business days
Minimum Application Amount Rs  500 and in multiples of Rs  1 thereafter
Minimum SIP Rs 100 for 6 months
NAV of the fund Rs 10 during NFO period
Entry Load Nil
Exit Load For units in excess of 10% of the investment,1% will be charged for redemption within 180 days
Risk Very High Risk
Benchmark S&P BSE 500 TRI
Fund Manager Nimesh Chandan
Sorbh Gupta
Siddharth Chaudhary

Bajaj Finserv Flexi Cap Fund SID Prospectus

What is the investment objective of Bajaj Finserv Flexi Cap Fund NFO?

To generate long term capital appreciation by investing predominantly in equity and equity related instruments across market capitalization.

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 and equity related instruments of largecap, mid cap and smallcap companies 65% 100% Very high
Other Equity and related instruments 0% 35% Very high
Debt Securities and Money Market
Instruments (including Securitised debt)
0% 35% Low to Moderate
Units issued by REITs & InvITs 0% 10% Moderate High

Why to invest in Bajaj Finserv Flexi Cap Fund NFO?

Here are a few reasons to invest in this fund.

Diversification: Flexi Cap mutual funds offer investors a diversified portfolio of stocks across different sectors and market capitalizations. This strategy helps to spread investment risks and reduces the impact of market volatility.

Potential for higher returns: Flexi Cap funds have the flexibility to invest in companies across various market capitalizations, providing the potential to generate higher returns compared to focusing on a specific market segment.

Flexibility: Flexi Cap funds possess the advantage of flexibility, allowing fund managers to adjust the portfolio composition based on market conditions. This enables them to capitalize on market opportunities and optimize returns.

Alignment with market trends: The inherent flexibility of the fund enables quick responses to changes in market trends, allowing investors to take advantage of 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.

Volatility: Flexi Cap funds, by investing in companies of all market capitalizations, are susceptible to market volatility, which can have a short-term impact on returns.

Increased risk: Compared to large-cap or mid-cap funds, flexi-cap funds carry relatively higher risk due to their exposure to small-cap stocks and untested companies.

Liquidity risk: Flexi Cap funds may face higher liquidity risk because of their investment in small-cap stocks. Selling such stocks in a volatile market can pose challenges in terms of liquidity.

High-risk instruments: This fund includes investments in REITs and InvITs, which are considered riskier investment instruments.5) Investors should read scheme information document (SID) for complete risk factors of the scheme.

How is the performance of existing Flexi Cap 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 3 Yrs 5 Yrs 10 Yrs
Quant Flexi Cap Fund 39% 22% 23%
Parag Parikh Flexi Cap Fund 27% 19% 19%
PGIM India Flexi Cap Fund 28% 18%
HDFC Flexi Cap Fund 33% 17% 17%
JM Flexi Cap Fund 28% 16% 18%
Canara Robeco Flexi Cap Fund 24% 15% 16%
Union Flexi Cap Fund 26% 15% 14%
DSP Flexi Cap Fund 24% 15% 17%
Navi Flexi Cap Fund 25% 15%
Edelweiss Flexi Cap Fund 27% 14%
Franklin India Flexi Cap Fund 29% 14% 17%
IDBI Flexi Cap Fund 25% 13%
SBI Flexi Cap Fund 24% 13% 18%
Kotak Flexi Cap Fund 22% 13% 18%
Aditya Birla Sun Life Flexi Cap Fund 24% 13% 18%
Axis Flexi Cap Fund 19% 13%
UTI Flexi Cap Fund 21% 12% 15%
HSBC Flexi Cap Fund 24% 12% 16%
LIC MF Flexi Cap Fund 19% 12% 12%
Bandhan Flexi Cap Fund 22% 10% 15%
Taurus Flexi Cap Fund 18% 7% 11%
Motilal Oswal Flexi Cap Fund 15% 7%

Should you invest in Bajaj Finserv Flexi Cap Fund NFO?

Bajaj Finserv Flexi Cap Fund NFO invests in stocks of various market capitalization i.e. in large cap, mid cap and smallcap stocks.

While largecap component provides stable returns, the midcap and smallcap segment has the potential to generate high returns. Such funds can help to diversify investors portfolio.

On the other side, its exposure to midcap and smallcap segment needs to be considered as 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. Also, Bajaj FinServ is new into mutual fund industry and it is their first equity fund that is being launched now.

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 flexicap mutual funds that have already proven in various market cycles.

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Suresh KP

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