Flexi-cap funds seem to be the new favourites of retail investors. The fund category, which is on the cusp of becoming the biggest in the equity space, has collected over Rs 13,725 crore in the last three month. The inflows along with the mark-to-market gains has meant that the overall AUM of flexi-cap funds has jumped 24% to Rs.1.93 lakh crore between January-end 2021 and July-end 2021. The AUM is only slightly behind the Rs.1.99 lakh crore assets of large-cap funds.
A recent survey done by Cafemutual also points in the same direction. The 'Mood of MFDs' survey showed that investors are showing maximum interest in flexi-cap funds. 43% of the respondents said flexi-cap funds are most in demand among investors followed by mid- & small-cap funds and large- & mid-cap funds.
Experts believe that the interest in flexi-cap funds is mainly driven by the past performance of some schemes. "Some funds in the flexi-cap category have done well in the recent past, so investors might be approaching MFDs asking for them. Most investors don't look at the fund category but the past returns to select funds for investment," said Rahul Jain, Senior VP Research at International Money Matters.
Fund houses, which did not have flexi-cap funds in their product line up due to segregation between multi cap and flexi cap by SEBI, are looking to tap this demand through NFOs.
Last month, ICICI Prudential, Nippon India and Mahindra Manulife launched their flexi-cap funds. ITI MF is also in the process of launching a scheme in the category.
"We needed a fund which can tap opportunities whenever and wherever they arise," said Ashutosh Bishnoi, MD & CEO of Mahindra Manulife MF. "We wanted to time the launch of our flexi-cap funds when market would take its next turn. This is happening now. Small-caps and mid-caps have got richly valued over the last 7 months, while large-caps have hardly moved. We believe this valuation gap is providing an opportunity. I think some of our competitors also saw the same opportunities and lined up launches," he added.
