INVESTMENT STRATEGY : Invest into “Flexi-Cap” Funds

INVESTMENT STRATEGY : Invest into "Flexi-Cap" Funds

In the current market scenario, where the prices of shares across market capitalizations have been corrected, a flexi approach of investment is a prudent way of investment. As the markets are expected to be volatile in the short to medium term, this can be a better way of getting benefited from the opportunities available across market capitalizations.

Flexi-Cap funds are a type of Diversified Equity Funds. These funds are called flexi cap because they do not have any bias towards any market capitalizations i.e. they can invest in Large Cap / Mid Cap / Small Cap etc. stocks in order to benefit from any investment opportunities available. These funds are actively managed and keep on changing / realigning allocations for market capitalizations / sectors on a frequent basis or as an when the market conditions changes.

At present most of the flexi cap funds have large exposure to large cap stocks and less exposure to mid cap stocks but in the present scenario where the mid cap indices has fallen more compared to large cap indices, these funds are best suited to get an opportunity to increase the exposure in the mid cap stocks. On the other hand these funds have a substantial exposure to large cap stocks which can help them in keeping the downside risk low on the overall portfolio.

Flexi-Cap funds are well suited for both aggressive and conservative Investors who intend to get benefited from investing in stock markets. They should have some allocation of their investments into Flexi-Cap funds.

We recommend Flexi-Cap funds like DSP ML Equity Fund and Birla Sunlife Equity Fund.

Birla Sunlife Equity Fund is a diversified equity fund which invests in sectors with high growth prospects. Additional focus is kept in identifying sunrise industries / concept stocks. The fund also takes medium-term bets on certain sectoral trends to ride on the growth momentum.

The fund manager doesn't feel that there will be a sharp bounce back in the stock markets. He expects the markets to remain volatile in the short term. He feels that there might be a sell off from the HNI's in the short term leading to the volatility. The fund has added KEC International, ITC, Welspun Gujarat and Bank of India to the portfolio. It has increased its exposure in Zee Entertainment. It has reduced its exposure in Siemens and Tata Power. It has exited from RPG Transmission, IDBI and Sesa Goa from the portfolio.

DSP ML Equity Fund is a diversified equity fund investing across sectors and market caps. The fund invests in stocks with a long-term investment perspective. The fund manager feels that markets are not stable and are being impacted because of the credit crises worldwide.

The fund manager thinks that Interest rate cut is required in the present scenario. The markets are not giving clear signals of the movement so he is maintaining diversified approach of investment. The fund has added HDFC, Hero Honda Motors Ltd and Hindustan Lever Ltd to its portfolio. It has increased its exposure in Reliance Industries Ltd and Cairn India Ltd. It has reduced its exposure in ICICI Bank Ltd, JaiPrakash Associates Ltd, Tata Power Company Ltd and Punjab National Bank. It has exited from ITC Ltd, Tata Chemicals Ltd

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