Flexi-Cap Mutual Funds Record Highest Capital Inflow In 2022

Flexi-cap mutual funds performed better than their peers in the equity mutual fund category this year, attracting investments of more than twice what large and mid-cap funds attracted.

In August alone, the total capital inflow in flexi-caps was Rs 2,099 crores, while the total investments in equity-oriented mutual funds were Rs 1.27 lakh crore in 2022.

However, due to the rising inflation, inflows into the mutual fund market have declined in recent months, said a study of ICICI Direct Research, the equity research unit of ICICI Securities.

"Inflows into equity funds have declined sharply in the last two months. From Rs 15,500 crore in June 2022, they declined to Rs 8900 crore in July and Rs 3000 crore (ex-NFOs) in August 2022," the study said. However, the demand for flexi-caps remained consistent throughout the year.

Demand For Flexi-Cap Funds

The demand for flexi-cap mutual funds stayed consistent this year, attracting Rs 19,590 crores so far, 20 per cent higher than capital inflows into multi-cap mutual funds, second on the list of inflows.

A flexi-cap mutual fund is an open-ended equity fund not restricted to investing in companies with a specific market capitalization. The fund manager has the flexibility to invest in any category of market capitalisation as they see fit. Unlike a multi-cap fund, the fund manager is not bound to invest a specific percentage of the corpus into any market cap category. Hence, the risk exposure in a flexi-cap is reduced by investing in companies with varying market capitalizations.

Multi-cap Inflows

The demand for multi-cap funds continued to fall after May. However, in March, multi-cap funds recorded an inflow of Rs 9,694 crore, the highest inflow in any mutual fund category on a monthly basis. From January to September this year, multi-cap mutual funds saw an inflow of Rs 15,663 crore.

Multi-cap funds invest in equities of firms with varying market capitalizations. According to the Securities and Exchange Board of India guidelines, fund houses must invest a minimum of 25 per cent of their corpus in each of the large, mid, and small-cap categories in a multi-cap fund.