what is the difference between multi-cap fund and flexi cap MF?
Before 2020 there was nothing called a flexi-cap mutual fund.
Back then, multi-cap mutual funds were required to invest in shares of small-cap companies, mid-cap companies, and large-cap companies.
Many multi-cap funds invested most of their money in large-cap stocks and some of the money in small and mid-cap stocks.
Multi-cap means that the mutual funds will invest in each type of stock. But since multi-cap mutual funds were mostly investing in large-cap stocks, a new rule was brought in.
The rule made it mandatory for multi-cap mutual funds to invest at least 25% in small-cap stocks, 25% in mid-cap stocks, and 25% in large-cap stocks.
At that point, many fund managers wanted to run funds that didn’t have such limits.
So a new category was introduced: flexi-cap mutual funds.
In flexi-cap funds, the only rule is that the money is invested in stocks. It doesn’t specify which kind of stocks.
Basically, flexi-cap funds are what multi-cap funds used to be before new rules.
After this new rule, many of the older multi-cap funds changed their definition and name to flexi-cap fund.
