Flexi Cap Funds have recently been attracting a lot of investment, as they give the fund manager a chance to switch between equity mutual fund schemes.
These type of funds tend to invest flexibly in companies of all sizes- large, mid or small. It focuses on investing in quality companies that are led by reliable management teams and follow strong business models.
4-Flexi Cap Funds rated 5-star by Morning star to start SIPs
|Name of the fund||3-year returns, annualized||Ratings by Morningstar|
|Axis Flexi Cap Fund||20.81%||5-star|
|Parag Parekh Flexi Cap||22.35%||5-star|
|PGIM India Flexi Cap Fund||24.69%||5-star|
|UTI Flexi Cap Fund||20.60%||5-star|
According to data from Morningstar, Axis Flexi Cap Fund, Parag Parekh Flexi Cap, PGIM India Flexi Cap Fund and UTI Flexi Cap Fund all have received a ratings of 5-star from the flexi cap category.
Should you start SIPs in these funds?
Ideally, we would believe that Flexi cap funds offer the fund manager the flexibility to switch in comparison to funds that are purely dedicated to a particular category. For example, a largecap fund has to stick to large cap stocks and so is the case with small cap stocks.
Most mutual funds offer SIPs at around the range of Rs 500 to Rs 1,000 every month, though some have SIPs have amounts that are even lesser. Those who have invested in SIPs in the past three years have received solid returns in the last 3 years and particularly returns have been scintillating in the last 1-year.
Lower your expectations of returns
If you are a mutual fund investor in general and are investing when the Sensex has crossed the 58,000 points mark, you need to lower your expectations, given the way the markets have run-up. Expecting whopping returns in the next 1-year from here onwards would be far fetched. We suggest that stick to Sips and stick to small amounts rather than big amounts.
According to leading brokers stock markets are overvalued at these levels and hence investors need to be careful. If markets fall, your returns from mutual funds are also likely to get hit though for Systematic Investment Plans it tends to be safer as returns get averaged out. There is a crazy inflow right now into mutual funds and the markets are being pushed higher by liquidity. As long as interest rates are lower the markets will be heading higher and we believe at some stage markets would fall, which would be a good time to increase your SIP amounts. However, for the time being just stick to small amounts whether it is lump sum investments or whether it is Systematic Investment Plans.
The returns and ratings from the mutual funds mentioned in this story are taken from Morningstar. Please do consult a professional advisor before you invest in mutual funds. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in the article. Caution needs to be exercised as mutual funds are subject to risks associated with the stock markets.