Mutual funds are a popular investment option for many residents and NRI/OCI, to grow their wealth. In fact over 72% of NRIs are looking to diversify their investment across India citing stable investment and better returns. Among the various types of mutual funds for investors, multi-cap and flexi-cap funds are becoming quite popular these days. Thought the names might sound similar, these two funds are completely different. We here take a look at both of these funds and provide a detailed comparison of flexi cap funds vs multi cap funds, key differences, benefits, which one to choose.
What are Flexi cap Funds?
Flexi cap funds as the name suggests are flexible in terms of investment. They invest in companies of all sizes, including large-cap, mid-cap, and small-cap stocks. They have the flexibility to invest across the entire market capitalization spectrum, providing diversification across various types of companies. A flex-cap fund offers investors the chance to spread their investments across companies of varying market capitalizations, reducing risk and unpredictability.
They are also known as diversified equity or multi-cap funds and aren’t restricted by company size, unlike mid-cap or small-cap funds. The fund manager evaluates growth potential across different companies and market segments, allowing investment in companies of any size. This approach offers flexibility and diversification to investors which helps to manage risk effectively.
Also read: What are Balanced Funds, Benefits and How to Invest?
What are Multi cap Funds?
Multi cap funds are a type of mutual fund that allows you to invest around various capitalization like:
- Large Cap Stocks
- Mid-Cap Stocks
- Small Cap Stocks
Investing in multicap funds offers diversification by including companies of varying sizes and sectors in your portfolio. Unlike funds focusing on specific market segments, multicap funds spread investments across the market, from large-cap to mid-cap and small-cap stocks. This strategy reduces risk by balancing exposure to different parts of the market. Fund managers can adjust portfolios based on market conditions, optimizing opportunities and managing risks. Multicap funds provide a flexible and well-rounded investment approach suited to navigate market dynamics effectively. Since multi-cap funds aim to balance risks and return, these funds are suitable for investors with various risk preferences and investment timelines.
Also read: Aggressive Hybrid Funds for NRI: Meaning, Benefits, Taxation & How to Invest
Key Differences: Flexi cap Funds Vs Multi cap Funds
| # | Key Difference | Flexi cap funds | Multi cap funds |
1. | Investment Guidelines | Can invest in companies of any size without specific rules on how much to invest in each size. | Invests in a Fixed proportion across large-cap, mid-cap, and small-cap stocks. |
2. | Regulatory Requirements | Not required to follow specific rules on how to divide investments among different company sizes. | Must follow rules about how much to invest in large-cap, mid-cap, and small-cap stocks. |
3. | Portfolio Adjustments | Managers can change investment freely based on market conditions | Managers must stick to set amounts for different sizes, even if market conditions change. |
4. | Risk Management | More flexible in managing risk by adjusting investment based on market conditions | Managers risk through set rules that ensure a balanced portfolio |
5. | Investment strategy framework | Focuses on maximizing returns by capitalizing on market opportunities without allocation constraints, leading to a more opportunistic and potentially higher growth strategy. | Balances risk and return by adhering to predefined allocations, benefiting from both the growth potential of smaller companies and the stability of larger companies. |
Also read: How understanding the Rule of 8-4-3 can turn your Rs 30,000 monthly into Rs 1.5 cr?
How to Invest in Mutual Funds as NRI/OCI?
NRIs can legally invest in different mutual funds schemes in Indian markets. This includes NRIs, Persons of Indian Origin (PIOs), and Overseas Citizens of India (OCIs). There are a few legal mandates like getting their Mutual Fund KYC done along with adhering to the rules of FEMA, SEBI, and RBI. Once your KYC is done, you can invest in domestic and international mutual fund schemes offered by Asset Management Companies (AMCs) via SIPs or lump sum.
Getting your Mutual Fund KYC is mandatory to open an account to invest in mutual funds in India irrespective of the investment amount. The Securities and Exchange Board of India (SEBI) has specified a set of regulations under the Prevention of Money Laundering Act (PMLA), 2002 which mandates that mutual fund houses and intermediaries perform their due diligence on investors before they are compliant to make investments.
For more info on NRIs, PIOs, and OCIs, you can refer here.
Also read: Step-by-Step Guide for NRIs to Pick a Winning Mutual Fund
Top 10 Flexi Cap Funds for NRIs in 2024
| Fund Name | Fund Size (In Crores) | Expense Ratio | 1 YR | 3 YR |
| Quant Flexi Cap Fund Growth for NRI | 5,563 Cr | 1.8% | 57.51% | 28.01% |
| JM Flexicap Fund Growth for NRI | 2,107 Cr | 2.0% | 66.11% | 30.60% |
| HDFC Flexi Cap Fund Growth for NRI | 52,874 Cr | 1.5% | 42.31% | 25.90% |
| Franklin India Flexi Cap Fund Growth for NRI | 15,267 Cr | 1.7% | 43.71% | 22.58% |
| Parag Parikh Flexi Cap Growth for NRI | 63,934 Cr | 1.3% | 36.97% | 21.19% |
| Edelweiss Flexi Cap Fund Growth for NRI | 1,785 Cr | 2.0% | 40.91% | 20.82% |
| HSBC Flexi Cap Fund – Growth for NRI | 4,399 Cr | 1.9% | 42.90% | 20.62% |
| Union Flexi Cap Fund Growth for NRI | 1,987 Cr | 2.1% | 39.83% | 20.35% |
| DSP Flexi Cap Fund Growth for NRI | 10,409 Cr | 1.8% | 35.83% | 16.85% |
| Kotak Flexicap Fund Growth for NRI | 47,466 Cr | 1.5% | 35.55% | 18.27% |
Also read: What is the 15x15x15 Rule In Mutual Funds for NRIs?
Top 10 Multi Cap Funds for NRIs in 2024
| Fund Name | Fund Size (In Crores) | Expense Ratio | 1 YR | 3 YR |
| Quant Active Fund Growth for NRI | 9,791 Cr | 1.7% | 55.53% | 24.77% |
| Nippon India Multi Cap Fund – Growth for NRI | 30,500 Cr | 1.6% | 54.37% | 32.03% |
| Kotak Multicap Fund Growth for NRI | 11,090 Cr | 1.7% | 57.99% | – |
| Bank of India Multi Cap Fund Growth for NRI | 498 Cr | 2.5% | 49.49% | – |
| Mahindra Manulife Multi Cap Fund Plan Growth for NRI | 3,478 Cr | 1.9% | 52.41% | 24.28% |
| Axis Multicap Fund Growth for NRI | 5,310 Cr | 1.9% | 48.48% | – |
| LIC MF Multi Cap Fund Growth for NRI | 1,007 Cr | 2.2% | 43.28% | – |
| ICICI Prudential Multicap Fund Growth for NRI | 11,882 Cr | 1.8% | 47.40% | 22.72% |
| HDFC Multi Cap Fund Growth for NRI | 13,425 Cr | 1.7% | 47.66% | – |
| Invesco India Multicap Fund Growth for NRI | 3,345 Cr | 1.9% | 43.57% | 19.55% |
Also read: 𝗕𝗲𝘀𝘁 𝗠𝘂𝘁𝘂𝗮𝗹 𝗙𝘂𝗻𝗱𝘀 for NRI in India 2024
Wrapping Up
Flexi Cap funds offer more flexibility and adaptability, allowing managers to invest in any company size without specific rules. This can potentially lead to higher returns but comes with more risk. Multicap funds, on the other hand, follow set rules for investing in large, mid, and small companies, providing a balanced approach that manages risk effectively. Both types of funds aim to diversify investments, but their strategies and flexibility levels differ.
Invest in NRI Mutual Funds with SBNRI
NRIs can now download the SBNRI App and choose to invest in different NRI mutual fund schemes in India with ease. You can also get detailed mutual fund advice from experts at SBNRI. Also, visit our blog and YouTube channel for more details.
SBNRI is an authorized Mutual Fund Distributor platform & registered with the Association of Mutual Funds in India (AMFI). ARN No. 246671. NRIs willing to invest in mutual funds in India can download the SBNRI App to choose from 2,000+ mutual fund schemes or can connect with the SBNRI wealth team to better understand Mutual Fund investments.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions. SBNRI does not intend to predict future returns, please read all related documents before investing.
FAQs
What is a Flexi Cap fund?
- Flexi-cap funds are like all-in-one package funds. They invest in companies of all sizes – big, medium, and small. So, when you invest in them, you’re getting a piece of all kinds of companies, not just one size.
Which multicap fund is best in 2024?
- Here is the list of some of the best-performing multi cap funds of 2024:
- Mahindra Manulife Multi Cap Fund.
- Nippon India Multi Cap Fund.
- Quant Active Fund.
- ICICI Prudential Multicap Fund.
- Invesco India Multicap Fund.
- Sundaram Multi Cap Fund.
- Aditya Birla Sun Life Multi-Cap Fund.
- Axis Multicap Fund.
Which is better, multicap or flexicap?
- It depends on your risk appetite. If you are willing to take higher risk for higher returns, and you trust your fund manager, you can go for flexi cap funds. But if you prefer lower risk and stable returns, and you like to follow the market performance, you may go for multicap funds.
Is a multicap fund good for the long term?
- Multi-cap mutual funds are perfect for investors looking for diversification across various market sizes and sectors. For positive results, it’s recommended to have a long-term investment horizon of at least 5 years when considering multi-cap funds.
Which is better, large-cap or multicap?
- Investing in multi-cap funds can offer more advantages like lower risk and higher returns over the long term compared to large-cap funds.
What is a bluechip fund?
- A blue chip fund is a type of investment that pools together stocks from stable and well-established companies known for consistent performance. These companies typically have a large market capitalization, which means they carry lower risk. Blue chip funds are considered a reliable investment option offering decent returns.
Which Flexicap fund is best?
- Here is the list of top flexi funds:
- Quant Flexi Cap Fund Growth Option Direct Plan
- JM Flexicap Fund (Direct) Growth Option
- Bank of India Flexi Cap Fund Direct Growth
- HDFC Flexi Cap Fund -Direct Plan – Growth Option
- Franklin India Flexi Cap Fund Direct Growth
What is the return rate of the Flexi Cap fund?
- The current value of the Quant Flexi Cap Fund’s Growth option in its Regular plan is Rs 97.40 as of May 06, 2024. Over different periods, its returns are 56.53% in the past year, 31.18% in the past 3 years, 30.67% in the past 5 years, and 15.8% since its launch.
Which is better: Midcap or Flexicap?
- Both flexi cap funds and mid cap mutual funds tend to perform well over the long term. However, your choice should depend on your investment period. Flexi cap funds, with their flexibility, might be more suitable during uncertain periods.
