When it comes to investing in the long term through mutual funds, a flexi cap fund is one of the best options. Some of the best products are the Parag Parikh Flexi Cap Fund and HDFC Flexi Cap Fund. As to the focus of investment, both funds are presented with an opportunity to be quite versatile by investing in stocks of various market capitalizations – large, mid, and small. Still, investment in each of these commodities is done differently, and each of them has its performance record that is vital for the potential investor to understand.
Parag Parikh Flexi Cap Fund: Focus on Value Investing
The Parag Parikh Flexi Cap Fund follows the value-investment style of operation. This fund was started in 2013 and tries to identify companies that are trading low and have high expected future returns, which can be either Indian or International. The approach used here is an investment strategy where the shares to be bought and held in the investment portfolio are held for long.
Global Exposure: It has a worldwide diversification policy since about 20-30% of its stocks are usually in foreign companies.
Low Turnover Ratio: The fund maintains a low portfolio turnover ratio that does not make many transactions in the market.
Value-Oriented: Specifically, the fund selects fundamentally sound companies that have fallen to inferior value levels than their actual worth.
HDFC Flexi Cap Fund: A Balanced Approach
India’s HDFC Flexi Cap Fund ranks among the largest and most widely used investment tools. It has a combined style since it invests in large-cap and mid-cap, as well as small-cap organizations. This fund invests more in growth stocks and it tends to change its position with various sectors in the market due to economic circumstances.
Large-Cap Focus: Currently, it has a major exposure to the large caps, which are quite defensive.
Active in Small-Caps: The fund has invested in small-cap stocks, especially when the market is good, hence, possibly good for high returns.
Actively Managed: The portfolio manager dynamically actualizes the portfolio allocation in terms of market problems.
Performance Comparison
In terms of performance, both funds have shown solid returns over the long term but with slightly different risk profiles.
Parag Parikh Flexi Cap Fund: The global exposure has helped the fund weather market downturns better, as it benefits from international diversification. It tends to be more conservative, which can appeal to risk-averse investors.
HDFC Flexi Cap Fund: This fund has shown higher returns during bullish markets thanks to its aggressive small-cap allocation. However, it may be more volatile in bearish conditions.
Conclusion
Both Parag Parikh Flexi Cap Fund and HDFC Flexi Cap Fund are strong contenders for long-term growth in the flexi cap category. As always, it’s important to assess your financial goals and risk tolerance before making an investment decision. Both funds can provide substantial returns if held over a long period, but they cater to slightly different investor profiles.
