Invesco Mutual Fund is
coming out with a NFO in the form of Invesco Flexi cap Fund.
Invesco Flexi cap Fund
would be a flexi cap fund with no restriction to any caps.
The fund would be open
for subscription from January 24, 2022 to February 07, 2022.
NFO
details for Invesco Flexi Cap Fund
|
Scheme Opens |
24/01/2022 |
|
Scheme Closes |
07/02/2022 |
|
Fund Manager |
Mr. Taher Badshah Mr. Amit Nigam |
|
Benchmark |
S & P BSE 500 TRI |
|
Minimum Investment |
1,000 |
|
Fund Category |
Flexi Cap |
|
Exit Load |
If redeemed/switched within one year from date of allotment: For 10% of investment: Nil 1% for investment Nil If redeemed/switched after one year |
Invesco Flexi Cap Fund
would be an open – ended dynamic equity fund with freedom to invest across
large, mid and small cap stocks with no restriction with respect to caps.
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Invesco
Flexi Cap Fund Investment Objectives
The investment
objective of the fund is to generate long term growth while identifying and
investing in opportunities across market caps through an in house market cap
model.
There is no guarantee that the investment objectives of the scheme would be achieved.
Invesco
Flexi Cap Fund Allocation
The asset allocation
for the fund would be something like this
|
Asset Class |
Minimum % |
Maximum % |
|
Equity and Equity Related instruments of large, mid and small cap
companies |
65 |
100 |
|
Debt and money market instruments |
0 |
35 |
|
Units issues by REITS and InvITs |
0 |
10 |
The above figures are
only indicative and not fixed, the fund managers have the liberty to move
across the asset classes depending upon prevailing market conditions as long as
they remain within the mandate permitted.
The fund can also
invest in REITs and InvITs if so desired.
Features of
Invesco Flexi cap fund
The fund will implement a top down and
bottom up approach.
There will be no restriction on any market
or sector caps.
The
preference would be for high quality and high growth companies
Example of Top Down and Bottom up
approach
|
Top Down |
Bottom Up |
|
Economic Indicators |
Valuations |
|
Global factors |
Management |
|
Inflation |
Historic return ratios |
|
Future earnings potential |
Growth |
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Multicap mutual
fund
A multicap mutual fund is a mutual fund
that would by mandate need to invest a minimum of
- 25% in large cap stocks
- 25% in mid cap stocks
- 25% in small cap stocks
The remaining 25% can either be invested in
debt, international equity, cash or any of the above caps or all.
In order to qualify as a multi cap mutual
fund, a mutual fund needs to invest a minimum of 75% in domestic equity divided
as described above.
What is a flexi
cap mutual fund?
A flexi cap mutual fund needs a minimum of
65% investment in equities at all times.
There is no restriction with regards to
caps or sectors.
There is no restriction with regards the
remaining 35% as well.
The fund manager can invest the remaining
35% as per her wish in any of the following:
- Domestic Equity
- International Equity
- Cash
- Debt
What is imperative is that 65% at all times
is invested in equities to qualify as a flexi cap fund.
Basically, a flexi cap fund is exactly what
a multi cap fund used to be earlier before the new rules set in, the only
change is in the name.
Difference between
multi cap and flexi cap mutual fund
|
A flexi cap
fund needs a minimum of 65% investment in equity. |
A multi cap
fund needs a minimum of 75% investment in equity. |
|
|
|
|
No
compulsory investment in mid and small cap stocks |
A multi cap fund
needs to compulsorily invest a minimum of 25% each in mid and small cap
stocks. |
|
|
|
|
It can
invest its complete portfolio into large cap stocks if needed. |
It can
invest only up to 50% of its complete portfolio in to large cap stocks at any
given time. |
|
|
|
|
Needs a
lower minimum exposure to equity as compared to a multi cap fund. |
Needs a
higher minimum exposure to equity as compare to a flexi cap fund. |
Why the need for
flexi cap mutual funds?
The Securities
and Exchange Board of India (SEBI) had on 11/09/2020 issued a circular bringing
about changes to fundamental characteristics of Multicap mutual funds.
The regulator believed that
most multicap mutual fund schemes were basically large cap schemes in terms of
their asset allocation disguised as multi cap funds.
These multicap mutual fund
schemes were therefore not true to their label.
"In order
to give more flexibility to the mutual funds and taking into account the
recommendations of Mutual Fund Advisory Committee (MFAC), a new category named
'Flexi Cap Fund' under equity schemes will be available,"
Most mutual fund houses had raised concern of
the necessary investments in mid and small cap stocks.
With mandatory 25% investment into mid and
small cap stocks (50 % overall) the new multicap fund structure would have
become even more aggressive than a large & mid cap mutual fund scheme.
Mid and small cap stocks are more illiquid
than large cap stocks and this would have created the risk of an unnecessary
bubble.
Mutual fund houses had the option of
converting an existing multicap mutual fund scheme into a flexi cap mutual
fund.
SEBI has mentioned in the
circular that "Mutual Funds have the option to convert an existing scheme
into a Flexi Cap Fund subject to compliance with the requirement for change in
fundamental attributes of the scheme in terms of Regulation 18(15A) of SEBI
(Mutual Funds) Regulations, 1996,".
Most mutual fund houses decided to convert
their existing multi cap schemes into flexi cap schemes except a handful few
which included Invesco mutual fund.
Therefore now Invesco has decided to launch
a flexi cap fund.
|
List of Multicap funds as on 31st January 2022 |
|
Axis Multicap |
|
Birla Multicap |
|
Baroda Multicap |
|
BNP Paribas Multicap |
|
HDFC Multicap |
|
ICICI Pru Multicap |
|
IDFC Multicap |
|
Invesco Multicap |
|
ITI Multicap |
|
Kotak Multicap |
|
Mahindra Manulife Multicap |
|
Nippon Multicap |
|
Quant Active Multicap |
|
Sundaram Equity Multicap |
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