Mutual funds: Flexi-cap mutual funds are the ones with companies of market capitalization from different spectrums. Be it a small cap, mid cap, or large cap, you can find stocks of every type in it. However, the flexi-cap fund is strictly an equity fund.
In contrast, a balance advantage fund is a combination of equity and debt-based funds.
According to experts, both Flexi cap mutual funds and balance advantage funds are good, and investors should invest in them according to their investment goals.
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“If you want to play safe with your money, then going with balance funds is great. This is because they are not prone to any sudden volatility in the market. Whereas, the Flexi cap funds give you the chance to put your money in established as well asgrowing equities. Returns and risk both are a bit higher in Flexi cap funds. From a trader’s perspective, Flexi Cap funds are a good go,” Sooraj Singh Gurjar, Founder and Managing Director, Get Together Finance (GTF).
However, choosing between balanced advantage and flexicap mutual funds depends on an investor’s risk appetite, financial goals, time horizon, and many other variables.
Ajinkya Kulkarni, Co-Founder and CEO, Wint Wealth said that over the past decade, flexicap mutual funds have outperformed balanced advantage funds by about 300 basis points.
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“Generally, balanced advantage funds are more suitable for new investors or those with a limited risk appetite. These funds can change their equity–debt allocations based on market movements. For example, during bull runs, such funds can increase their debt allocation, and when the market turns bear, they can raise the equity portion in their portfolio. Although there is no predefined cap on debt vs equity allocation for balanced advantage funds, most funds invest in equity arbitrage or hedge via derivatives to ensure that they are treated like equity schemes and have less tax liability,” said Ajinkya Kulkarni
On the other hand, Flexi-cap funds are pure equity funds that can invest across the entire market without any caps. Due to their higher equity exposure, these funds are more volatile but also have the potential to generate comparatively better returns in the long run.”
So for a first-time investor, it is advisable to go through the balance advantage fund route as these are more stable and less volatile compared to a flexicap fund which is 100% equity-oriented, suggested Mukesh Kochar, National Head – Wealth, AUM Capital.
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Meanwhile, according to the data from the Association of Mutual Funds in India (AMFI) released on Wednesday, inflow into equity mutual funds slumped by over 30 per cent month-on-month to ₹14,091 crore in September. Despite the decline, inflow through SIPs (Systematic Investment Plans) hit a fresh all-time high of ₹16,042 crore last month.
