In November, Sebi had launched a flexi-cap category for mutual funds, requiring funds in this category to invest at least 65% of their corpus in equity, but without any restrictions on whether they can invest in large-, mid-, or small-cap stocks
ICICI Prudential Mutual Fund has announced the launch of a flexi-cap fund. It is an open-ended equity scheme that aims to provide capital appreciation by investing in equity and equity-related securities across market capitalization based on an in-house market capitalization allocation model.
The flexi-cap fund will follow a mix of top-down and bottom-up approach to identify opportunities in large-, mid- and small-cap spaces.
According to the asset management company (AMC), the investment universe considered will be the S&P BSE 500 and the stock selection can be based on multiple parameters such as company fundamentals and valuations, among others.
“Flexi-cap is one category among the equity schemes that is the most flexible among the equity scheme offerings," said Nimesh Shah, managing director and chief executive officer, ICICI Prudential Asset Management Company.
“We will be guided by our in-house market cap allocation model to provide direction and help ascertain the right allocation to various market caps," he added.
The scheme will be managed by senior fund manager Rajat Chandak.
The overseas investments will be managed by Priyanka Khandelwal.
Other funds managed by Chandak at ICICI Prudential AMC include regular savings, Bharat consumption, blue-chip and balanced advantage.
The flexi-cap scheme will invest 65-100% in equity and equity-related instruments of large-cap, mid-cap and small-cap companies; 0-35% in other equity and equity-related instruments; 0-35% in debt instruments, units of debt mutual fund schemes and money market instruments and 0-10% each in preference shares and units issued by real estate investment trusts (Reits) and infrastructure investment trusts (InvITs).
Melvin Joseph, a Sebi-registered investment adviser and founder of Finvin Financial Planners—who doesn’t recommend new fund offers—said that from an investor’s point of view, there’s no shortage of any funds, including flexi-cap funds, in the market.
“Earlier the concept of flexi-cap was not there and in the multi-cap theme, a fund manager could go heavy on any category. Because of this most of the fund managers focused on large-caps due to their higher valuations. If any investor wants to go with the old mandate where the fund manager decides exposure to a certain category, then they can go with the flexi-cap category. In a flexi-cap category, there is a comfort that the fund manager will decide the allocation to a specific category based on the valuations rather than 25% minimum allocation to a theme such small-caps in multi-cap funds," Joseph added.
In November, the Securities and Exchange Board of India (Sebi) had launched a flexi-cap category for mutual funds, requiring funds under this category to invest at least 65% of their corpus in equity, but without any restrictions on whether they can invest in large-, mid- or small-cap stocks.
This came after the markets regulator in September had introduced new norms for asset allocation rules for multi-cap funds, mandating a minimum 25% allocation each in large-, mid- and small-cap stocks.
Following the changes in rules, most funds moved to the flexi-cap category.
According to a recent report by Morningstar India, total assets managed by mutual funds under the newly created flexi-cap category stood at ₹1.59 trillion as of March-end.
The felxi-cap category constituting 16% of the overall assets of open-ended equity funds, second only to large-cap funds.
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