Companies are altering their procedures and policies on their initiative. Work from home has become the new normal, and virtual meetings and education are gaining popularity.
Do you believe all of this would have been feasible if individuals and organizations had been more rigid? If they were not adaptable enough to the changing environment?
Almost certainly not. Opportunity equals adaptability. We can only benefit from new and developing possibilities if we are adaptable enough to seize them. This is the fundamental principle of Flexicap funds.
Agile is the new mantra
The Securities Exchange Board of India (SEBI) has created a new mutual fund category known as Flexicap funds. These funds are multifaceted. They must invest at least 65 percent of their total assets in equities and equity-related securities, with a dynamic allocation among big, mid, and small-cap companies. This implies that, depending on market circumstances and possibilities, fund managers can invest in large-cap, mid-cap, and small-cap companies all at once.
Flexicap funds provide many advantages that can help you optimize your portfolio’s risk-adjusted returns. Among these advantages are the following:
Risk reduction through diversification: The risk levels of stocks with various market capitalizations fluctuate. Small-cap stocks, for example, are seen to be riskier than large-cap equities. This is large because large-cap stocks are usually market leaders with proven growth and profitability potential. This gives them stability.
Small-cap stocks, on the other hand, are firms that are still in the early phases of development and have not yet shown their ability to expand and produce money. As a result, there is more unpredictability in these equities. In a declining market, small-cap stocks are more likely to collapse sharply than large-cap equities. Flexicaps’ diversification component guarantees that losses on small-cap companies are mitigated by exposure to large-cap firms.
Return optimization: Chances come in many forms and sizes. It pays to be able to invest across sectors and equities to capitalize on the market’s different possibilities. Because flexicap funds are dynamic and adaptable, fund managers may invest across market capitalizations and capitalize on new opportunities. Furthermore, fund managers may construct an investment portfolio that delivers a healthy combination of stability and growth by investing in large-cap, mid-cap, and small-cap firms. Investing may be divided between steady large-caps and high-growth mid-and small-caps.
ICICI Prudential Flexicap Fund: The flexibility that you need
Given the value-accretive potential of flexicap funds, ICICI Prudential Mutual Fund has announced the launch of its flexicap fund. The fund will invest in a mix of large-cap, mid-cap, and small-cap companies, shifting between them dynamically based on market circumstances, the macro environment, and stock-specific possibilities. To find opportunities throughout market cycles and adjust exposure, the fund employs a top-down and bottom-up strategy.