Flexi- or multi-cap fund? Go by risk appetite, not by past returns

Multi-cap funds, with their higher exposure to mid- and small-caps, can outperform but with higher volatility

Both multi-cap funds and flexi-cap funds have given single-digit returns year-to-date (YTD) in 2022. The multi-cap category, which has asset under management (AUM) of Rs 66,569 crore, has given a return of 7.03 per cent. The older and much larger flexi-cap category, which has an AUM of Rs 2,52,855 crore, has given a return of 3.19 per cent YTD. Experts say investors should be guided by their risk appetite, and not go by past returns, when choosing between the two categories.

Investment mandate

Both categories are allowed to invest in large-, mid- and small-cap stocks. However, while flexi-cap fund managers