A flexi-cap fund is a kind of mutual fund that isn’t limited to investing in companies with a predetermined market capitalization. This kind of fund design will be indicated in the fund’s outline. A flexi-cap fund can give the fund manager greater investment decisions and diversification possibilities.
How a Flexi-Cap Fund Works
In contrast to other funds, for example, mid-cap or small-cap funds, the size of a company isn’t a constraint for flexi-cap funds. A flexi-cap fund may invest in any company, regardless of the company’s size.
Kinds of Companies by Market Cap
Market capitalization is quite possibly the most well-known ways mutual fund select companies in which to invest. Market capitalization alludes to the total dollar market value of a company’s outstanding shares. Market capitalization is regularly alluded to as “market cap.” Market cap is calculated by multiplying a company’s shares outstanding by this market price of one share.
Using market capitalization to show the size of a company is important because company size is a basic determinant of various characteristics where investors are interested (including risk).
Large-cap companies typically have a market capitalization of $10 at least billion. These large companies have usually been around for quite a while, and they are major players in deep rooted industries. Investing in large-cap companies doesn’t necessarily bring in tremendous returns in a brief timeframe. Notwithstanding, for a really long time, these companies generally reward investors with a predictable increase in share value and profit payments.
Small-cap companies have a market capitalization of between $300 million to $2 billion. These small companies could be youthful in age and/or they could serve specialty markets and new industries. These companies are viewed as higher risk investments because of their age, the markets they serve, and their size. Smaller companies with less resources are more sensitive to monetary slowdowns.
Example of a Flexi-Cap Fund
The Fidelity Stock Selector All-Cap Fund is a broadened homegrown equity strategy that invests broadly across all sectors, market capitalizations, and styles. The fund is managed by an individual from Fidelity’s Global Asset Allocation division and a team of sector portfolio managers. Portfolio sector weightings are kept similar to those of its benchmark in an effort to add value through active stock determination and also to minimize the risks associated with sector or market timing.
The fund had a 10-year annualized return of 14.51% as of August 31, 2020, compared with 14.88% for its U.S. large growth benchmark. Its 10 largest holdings, which made up 25.46% of the fund, were:
- Microsoft Corp. (MSFT)
- Apple Inc. (AAPL)
- Alphabet Inc CL A. (GOOGL)
- Amazon.com Inc. (AMZN)
- Meta Platforms Inc. (formerly Facebook) Class A (FB)
- Adobe Inc. (ADBE)
- United Health Group Inc. (UNH)
- Proctor and Gamble Co. (PG)
- Salesforce.com Inc. (CRM)
- Roche Holdings AG