Flexi-cap funds are mutual funds that don’t restrict themselves to investing in companies with predetermined market capitalization, which will be stated in their outline. A flexi-cap fund offers greater investment decisions and diversification possibilities to its fund manager.
How A Flexi-Cap Fund Works
Contrary to mid-cap or small-cap funds, which restrict their investments based on company size restrictions, flexi-cap funds do not limit their investments to any particular size of company. They can invest in any company regardless of size.
Kinds Of Companies By Market Cap
Market capitalization is one of the best-known ways mutual funds select companies for investments. Market capitalization refers to the total dollar market value of an outstanding share held by an enterprise and often refers to as its “market cap.” To calculate market cap for any company, multiplying their number of outstanding shares with its price per share market price.
Market capitalization can provide an accurate representation of a company’s size. Company size is one key determinant that investors consider when considering risk.
Large-cap companies generally boast market capitalizations of at least $10 billion. These long-established, major players in several different industries often provide significant returns over the long haul, not necessarily with immediate dividend payments but through increases in share value and subsequent profit payments. Investing in these large cap companies doesn’t always produce instantaneous gains but usually yields predictable increases in share price along with stable payments to their investors over time.
Small-cap companies typically have market capitalizations between $300 million to $2 billion, making them vulnerable investments due to their age, specialty markets served, or lack of resources compared to larger competitors. They may be young in age or serving new industries – all factors which pose greater risk.
Example Of A Flexi-Cap Fund
Fidelity Stock Selector All-Cap Fund is a broadened homegrown equity strategy that invests across sectors, market capitalizations and styles. Managed by Fidelity’s Global Asset Allocation division with assistance from sector portfolio managers; portfolio sector weightings remain similar to its benchmark for maximum value creation while mitigating risks related to sector or market timing.
As of August 31, 2020, this fund had achieved an annualized return of 14.51% versus its U.S. large growth benchmark, which averaged 14.88% annually. Of its 10 largest holdings which comprised 25.46% of the fund:
- 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