Which mutual fund should you invest in? Learn about flexi and multi-cap funds.

Mutual Fund Investment Tips: Flexi and multi-cap funds are good options for those just starting to invest in mutual funds. Find out which one is best for you.

These days, people have become more conscious about investing. They no longer just want to keep their money in the bank, but also want to grow it. In such a situation, mutual funds have become an excellent option. But the question is which fund should be invested in to generate good returns and keep risk under control.

Flexi and multi-cap funds are two popular options among investors. Both invest in the equity market, but their strategies are different. Understanding the difference is crucial to making the right choice.

Flexi-cap funds are as flexible as their name suggests. These funds can invest in large, mid-, and small-cap companies simultaneously. The fund manager has the freedom to adjust their investments based on market conditions, such as when risk increases in large companies. They can then shift to mid- or small-cap investments.

The biggest advantage of this fund is its diversified portfolio. Investments are spread across multiple sectors and companies, reducing risk. Even if the market falls, the fund manager can limit losses by changing strategies. This is a great option for long-term investors.

The investment allocation in multi-cap funds is fixed. SEBI regulations require the fund to invest at least 25% of its capital in large-, mid-, and small-cap companies. This means these funds maintain a balance of companies of all sizes, providing both growth and stability.

The fixed share of each segment in these funds ensures stable investments. Large-cap companies provide stability, while mid- and small-cap companies promote growth. This maintains portfolio balance. This is the right option for investors who seek good returns with balanced risk.

If you want the fund to adjust itself to market fluctuations, a flexi-cap fund would be a better option. If you prefer stable investments with a fixed structure, a multi-cap fund would be a good fit. Both are good for long-term investments. Just choose according to your risk appetite.