The multi cap vs flexi cap debate continues to be persevering with within the mutual fund circles. Let’s check out how each these classes have fared in 2021.

To start with, the web belongings below administration (AUM) of flexi cap funds stood at Rs 2,14,649.76 crore on the finish of November. Compared, multi cap funds managed a internet AUM of Rs 31,543.38 crore.

The large distinction in AUM is not only due to the contemporary inflows but additionally the shift of huge schemes. Final yr, when market regulator SEBI issued pointers to make multi cap funds true-to-label by implementing minimal publicity to giant, mid and small-cap shares, many fund homes shifted to the newly shaped flexi cap class. Just a few AMCs adjusted their multi-cap funds as per the mandate additionally. This shift impacted the overall AUM managed by the multi cap class considerably.

Though, the flexi cap funds have been seen higher positioned to deal with market volatility, multi cap funds have outperformed flexi cap funds in 2021. That is majorly attributed to the run up in small and mid cap shares. Most flexi cap funds are giant cap inclined and therefore missed out on further returns this yr. Flexi cap funds supplied a mean return of 31.89% in 2021 in comparison with 40.92% returns posted by the multi cap class. The topper within the flexi cap class supplied 48.73% returns in 2021, in comparison with 67.86% returns by the topper in multi cap class.

“The only largest issue contributing in the direction of multi caps outperformance vis-à-vis flexi cap is the previous’s increased allocation in the direction of mid and small cap. Put up SEBI’s round in Sept 2020, multi caps must have a minimal of 25% every in giant, mid and small cap corporations. This nudged them to have a better allocation in the direction of mid and small caps. Then again, most flexi caps have decrease mid and small caps (when in comparison with multi caps),” says Subir Jha, Founder, BuckSpeak, a wealth administration agency, primarily based in Hyderabad.

Within the final 1 yr (as on ninth Dec 2021), the return delivered by numerous indices are: Nifty 50: 29.9 %; Nifty midcap 100: 53.01 %; Nifty smallcap 100 65.9 %.

This clearly explains the explanation behind multi ti cap class’s outperformance. “Thoughts you, this by no means is indicative of how each these classes would do sooner or later,” says Subir Jha. Monetary planners imagine that flexi cap funds nonetheless have an higher hand on the subject of delivering returns in a risky market.

As of right this moment, there are 28 flexi cap funds available in the market in comparison with 15 multi cap funds, most of that are newly launched schemes.