How Flexi Cap Funds Can Dance through Market Swings?

Flowing with the rhythm with fluidity in movement and flexibility to change pace, space, and position.

No, we aren’t talking about dancing, but about Flexi Cap Mutual Funds.

Flexi Cap Funds are much like dancers. They follow the beat of the market movements, changing pace and position in the various market caps within the fund thanks to their inherent flexibility and adaptability.

Let us understand just how they manage to dance to the changing tunes of the market.

Know more about Flexi Cap & its Meaning

What are market swings?

To dance to the market rhythm, you first must understand the market swings. In the financial markets, a swing refers to a change in the direction and flow of the market that leads to increased volatility. These swings can be triggered by multiple factors like global supply chain issues, policy level changes, interest rate announcements, geopolitical reasons, or news. These swings can be market-wide, sector-wide, or for a particular company.

To dance through these market swings, you need to catch up with the volatility early and adapt your strategy depending on which way the market is swinging, from bear to bull or from bull to bear. This needs active investing, investing and technical acumen and eyes on the market.

And that is where Flexi Cap funds may come into the picture. The fund manager takes the lead and waltzes the fund through the market swings and aims to help from dynamic investing.

Here’s how Flexi Cap funds can dance through market swings:

Flexi Cap Funds juggle your investments among the three market caps – large, mid, and small. This quality can be useful in a volatile market where global and domestic, political, and social movements affect the rhythm of the stock market.

Flexibility

Changing tunes and beats necessitate a change of dancing style as well. While learning or being trained in a particular dance style needs tremendous skill, being flexible within that style to make sure any change in pace does not hamper your performance is equally important.

In fact, sometimes mixing multiple styles to create a new fusion freestyle dance does the trick.

Like trained dancers, every investor has his or her own investing style and strategy. While some prefer staying conservative with large-caps, others are go-getters who lean toward small and mid cap investing and aggressive investing. Your own unique style might work well for you usually. But when a market swings from bear to bull or vice-versa, what you need is a smart strategy that can weigh your options and decide accordingly.

To make the best of such a swing, you need flexibility in your investment style to oscillate in tandem with the market momentum. This is where Flexi Cap funds can score. With exposure and freedom to invest and allocate in all market caps across all sectors, the fund creates a fusion style of its own with an aim to bring potential returns in the long term. And while you can figure out the combination that suits your style the most, a little help from an expert can help you do even better.

Active investing

Just being able to dance is not enough. A good dance recital takes into consideration many things right from the given duration, the venue, the kind of audience expected and an acute knowledge of how others are expected to perform. And when it comes to dancing, choreographers can do all this and more.

Fund Managers are the choreographers of your fund investments. Apart from being trained and skilled at their job, they come with years of experience and knowledge from various sources that we as normal investors might not have access to. Using the wide range of financial tools at their disposal fund managers can observe, decode, and even predict trends and market swings, much before we probably can.

This puts them at an advantage which is transferred to your investments as well. Having all this information at their fingertips, fund managers are better equipped to take calculated decisions and invest early into the caps or sectors their research says are likely to do well. In case of a sudden market swing, this early and efficient transition can help.

Whether it be dancing or investing, practice and discipline matter a lot. A simple way of investing in Flexi Cap funds is by SIP (Systematic Investment Plan). Disciplined and regular investing throughout the market volatility can remove the emotional bias and help build wealth over the long term.

Know More about SIP & its meaning

Start your equity investing journey with an SIP in the Aditya Birla Sun Life Flexi Cap Fund.

Aditya Birla Sun Life Flexi Cap Fund

(An open ended dynamic equity scheme investing across large cap, mid cap, small cap stocks)

This product is suitable for investors who are seeking*

• Long term capital growth
• investments in equity and equity related securities

 

*Investors should consult their financial advisers if in doubt whether the product is suitable for them

Risk-o-meter as on August 31, 2023. The Risk-o-meter(s) specified will be evaluated and updated on a monthly basis. For updated risk-o-meter(s), kindly refer to the latest factsheet.

For further information, please refer to SID/KIM of the scheme.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.