Mirae Mutual Fund is
coming out with a NFO in the form of Mirae Flexi cap Fund.
Mirae Flexi cap Fund
would be a flexi cap fund with no restriction to any caps.
The fund would be open
for subscription from February 03, 2023 to February 17, 2023.
NFO
details for Mirae Flexi Cap Fund
Scheme Opens |
03/02/2023 |
Scheme Closes |
17/02/2023 |
Fund Manager |
Vrijesh Kasera |
Benchmark |
NIFTY 500 TRI |
Minimum Investment |
5,000 |
Fund Category |
Flexi Cap |
Exit Load |
1% If redeemed/switched within one year from date of allotment Nil If redeemed/switched after one year |
Mirae 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.
Mirae
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.
Additional reading: Click Here to read why you should not invest based on past returns
Mirae
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.
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.
A nfo means a new fund from a mutual fund
house which was not available earlier.
With growing acceptance of mutual funds as
a form of investment, mutual fund houses periodically introduce new fund offers
so as to complete their basket of investments available for investors.
A NFO is usually what results in the
beginning of a mutual fund scheme.
Other reasons being merger of schemes
within the same fund house or merger or acquisition of two or more fund houses,
these are rare instances though.
Additional reading: Click Here to read whether you should invest directly in stocks or equity mutual funds
NFO meaning
A nfo or a new fund offer is a method by
which a mutual fund scheme raises the initial investment into the fund.
The new fund offer is available for
purchase for a limited number of days only.
After which it becomes unavailable for
fresh purchase or redemption for a couple of days.
Once this time duration is complete, the
nfo no more remains a nfo and is treated like any other open ended mutual fund
scheme.
In which you can invest and redeem as and
when you please, considering it is an open ended fund and you comply with the
necessary exit load calculations.
Should you invest
in a nfo?
You
can consider it if:
The new fund offer is a category of fund
that is not existent in your mutual fund portfolio.
If it is going to be a part of your
satellite portfolio.
If it adds a unique touch to your mutual
fund portfolio.
If you understand the functioning,
objectives and risks attached with the new fund offer.
The nfo mutual fund is aligned with your
risk profile.
You
should avoid it if:
The new fund offer is not going to add
anything of unique significance to your mutual fund portfolio.
If the nfo is going to be a part of your
core portfolio.
If the only reason you are investing is due
to FOMO (Fear of missing out).
If you do not understand the investment
style and risks attached with the nfo.
The nfo mutual fund is not aligned with
your risk profile.
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,".