Invesco Mutual Fund recently rolled out its Invesco India Flexi Cap Fund, an open-ended dynamic equity scheme, which would invest across large cap, mid-cap and small cap stocks. The fund will focus more on high growth and high-quality companies, and those which have exemplified a turnaround.
The fund is set to embrace a blend of top-down and bottom-up approach to pick stocks.
The fund house projects this as a fund which aims to identify winners across sectors and market cap based on relative attractiveness of investment opportunities. In other words, only those stocks will be chosen to comprise the fund, which are more likely to perform better, regardless of the sector and the market cap they fall under.
Flexi cap: Key advantages
Flexi-cap funds are the mutual funds which make investment in companies across the sectors and market capital spectrum — large cap, small cap and mid cap stocks.
Flexi cap approach helps balance risk and returns. There are several benefits of investing in flexi cap funds: First and foremost — these funds are flexible & dynamic, and they allow investors to pursue opportunities across the market cap range and sectors. Second, they facilitate long term ownership since the fund doesn’t need to rebalance portfolio as a result of market cap changes.
Third, they follow diversification which helps to generate consistent outcomes over long term while lowering risk.
During certain years, large cap funds tend to outperform their peers, and during some years, mid cap funds perform well, while there are times when small cap funds outperform during other years.
It is unlikely that funds across all categories perform during the same year. With this investment philosophy in mind, Invesco flexi cap tries to pick winners from different categories and make a strong mix of stocks falling under different categories.
This can be illustrated with the help of following table:
| Year | Large cap performance (%) | Mid cap performance (%) | Small cap performance (%) |
| 2021 | 23 | 41 | 64 |
| 2020 | 17 | 21 | 33 |
| 2019 | 16 | -2 | -6 |
| 2018 | 7 | -12 | -23 |
| 2017 | 30 | 50 | 61 |
| 2016 | 3 | 9 | 3 |
| 2015 | -4 | 9 | 8 |
| 2014 | 32 | 57 | 71 |
| 2013 | 11 | -4 | -10 |
In the above table, it is clear that large cap funds performed poorly in 2018, but did well a year prior to that; the mid caps didn't do well in 2018 and 2019 but were performing good in 2017. Likewise, small caps exhibited below par performance in 2018.
The benchmark against which the fund's performance will be assessed is S&P BSE 500 TRI. The NFO closes on February 7.