As per SEBI categorization norms, Flexi cap funds are mandated to invest minimum 65% of its assets in equity and equity related instruments with no restrictions around market cap allocations. It offers investors with diversification across market caps based on prevailing market conditions.
The Flexi cap funds provide a diversified approach that ensures risk-adjusted optimal returns and lower the impact of volatility on your portfolio by dynamically shifting allocation between large cap, mid-cap and small cap segment.
The current market conditions, with changes in economic activities that influences the performance of various market segments, makes it a favourable environment to invest in Flexi cap funds. On this backdrop, many fund houses such as ICICI Prudential Mutual Fund and Nippon India Mutual Fund have recently launched Flexi cap funds.
Joining the bandwagon Mahindra Mutual Fund has launched Mahindra Manulife Flexi Cap Yojana. It is an open-ended dynamic equity scheme investing across large cap, mid cap, and small cap stocks.
On the launch of this fund, Mr Ashutosh Bishnoi MD and CEO at Mahindra Manulife Investment Management Private Limited. said, “Indian equity markets have sustained their rally upwards notwithstanding the fierce second wave of covid-19 pandemic. The benchmark indices have almost doubled since the declaration of nationwide lockdown at the end of March 2020. However, it’s very likely that equity markets may remain volatile owing to various uncertainties prevailing across global economies. The flexi cap funds are capable of delivering steady returns across market cycles, and are appreciated for their diversified approach that ensures balance between risk and return. The flexibility to switch, if and when needed to mid and small-caps, which are better positioned to capture any potential upside from expected economic recovery make these funds well acclaimed.”
Table 1: Details of Mahindra Manulife Flexi Cap Yojana
| Type | An open-ended dynamic equity scheme investing across large cap, mid cap, small cap stocks. | Category | Flexi cap Fund |
| Investment Objective | The investment objective of the Scheme is to generate long-term capital appreciation by investing in a diversified portfolio of equity and equity-related securities across market capitalization. However, there can be no assurance that the investment objective of the Scheme will be achieved. | ||
| Min. Investment | Rs 1000/- and in multiples of Re 1 thereafter. Additional Purchase Rs 1000/- and in multiples of Re 1 thereafter. | Face Value | Rs 10/- per unit |
| SIP/SWP/STP | Available | ||
| Plans |
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Options |
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| Entry Load | Not Applicable | Exit Load |
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| Fund Manager |
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Benchmark Index | Nifty 500 Index TRI |
| Issue Opens: | July 30, 2021 | Issue Closes: | August 13, 2021 |
(Source: Scheme Information Document)
The investment strategy for Mahindra Manulife Flexi Cap Yojana is as follows:
Mahindra Manulife Flexi Cap Yojana will predominantly invest in equity and equity related instruments to provide long-term wealth creation by dynamically managing the investments across large, mid and small-cap stocks.
The scheme will follow an internal investment framework Growth, Cash-flow generation, Management, Valuation (GCMV) to determine fair valuation of stocks, which will additionally help in estimating valuation gaps, if any. It aims to construct the portfolio with a mix of core investment opportunities (medium to long term compounding stories) and tactical investment opportunities (for e.g. cyclical sector, commodities cycle etc.)
The fund manager will follow an active management style. The scheme will focus on a top down approach to select sectors and follow a bottom up approach to pick stocks across the sectors based on the quality of business model and quality of management. Quality of business model and quality of management will be assessed by evaluating past track record and/or future outlook.
The selection of companies will be guided by a combination of one or more factors like:
a) Profitable growth in good or bad cycles.
b) Optimum utilization of capital and/or capacity.
c) Leadership shown in the industry in which they operate.
d) Expectations of a turnaround in business momentum.
e) Track record of consistent & long-term execution potential.
Under normal circumstances, the asset allocation will be as under:
Table 2: Asset Allocation of Mahindra Manulife Flexi Cap Yojana
| Instruments | Indicative Allocation (% of assets) | Risk Profile | |
| Minimum | Maximum | High/Medium/Low | |
| Equity & Equity related instruments ^ | 65 | 100 | High |
| Debt and Money Market Securities (including TREPS (Tri-Party Repo), Reverse Repo) | 0 | 35 | Low to Medium |
| Units issued by REITs & InvITs | 0 | 10 | Medium to High |
^Including derivative instruments to the extent of 50% of the Net Assets of the Scheme. Investment in derivatives shall be for hedging, portfolio balancing and such other purposes as maybe permitted from time to time under the Regulations and subject to guidelines issued by SEBI/RBI from time to time.
(Source: Scheme Information Document)
Apart from investing 65% of its assets in equity & equity related instruments, it may invest up to 35% in debt and money market securities (including TREPS (tri-party repo), reverse repo). It may also invest up to 10% in units issued by REITs & InvITs in order to meet the liquidity requirements.
Who will manage Mahindra Manulife Flexi Cap Yojana?
Mr Manish Lodha and Ms Fatema Pacha will be the dedicated fund managers for this scheme.
Mr Manish Lodha is Fund Manager – Equity at Mahindra Manulife Investment Management Pvt. Ltd. (‘MMIMPL’). He is a CA, CS and B.com (H) graduate and has over 15 years of experience in financial services. Prior to this, he was associated as Asst. Fund Manager (Equity) with Canara HSBC OBC Life Insurance Co. Ltd. and as Research Analyst (Equity) with Kotak Mahindra Mutual Fund.
The other schemes managed by Mr Manish Lodha are Mahindra Manulife ELSS Kar Bachat Yojana, Mahindra Manulife Multi Cap Badhat Yojana, Mahindra Manulife Mid Cap Unnati Yojana, Mahindra Manulife Top 250 Nivesh Yojana, Equity portion of Mahindra Manulife Arbitrage Yojana, Mahindra Manulife Equity Savings Dhan Sanchay Yojana and Mahindra Manulife Hybrid Equity Nivesh Yojana.
Ms Fatema Pacha is Fund Manager – Equity at Mahindra Manulife Investment Management Pvt. Ltd. (‘MMIMPL’). Her qualifications are PGDM (Finance), BE (Computers) and has over 14 years of experience in financial services industry. Prior to this, she has worked with ICICI Prudential Life Insurance as Fund Manager (Equity) and UTI Mutual Fund as Research Analyst (Equity).
The other schemes she manages are Mahindra Manulife Rural Bharat and Consumption Yojana, Mahindra Manulife ELSS Kar Bachat Yojana, Mahindra Manulife Multi Cap Badhat Yojana, Mahindra Manulife Large Cap Pragati Yojana, Mahindra Manulife Focused Equity Yojana, Equity portion of Mahindra Manulife Equity Savings Dhan Sanchay Yojana and Mahindra Manulife Hybrid Equity Nivesh Yojana.
Fund Outlook – Mahindra Manulife Flexi Cap Yojana
Mahindra Manulife Flexi Cap Yojana will invest in large universe of stocks across market capitalization large cap, mid cap and small cap. It provides investors with diversification by investing in different market segments and benefit from the emerging opportunities.
This scheme offers flexibility to fund managers to actively manage the holdings and monitor individual stock position based on market capitalization. The endeavour will be to allocate funds across market caps after taking into consideration the macro-economic indicators, policy environment, valuations, and market conditions.
Although the scheme may offer diversification and investment in large caps that provides stability and mid and small caps that captures emerging opportunities, it will still be prone to high risk. The fund manager’s ability to construct the Flexi cap portfolio remains to be seen and it will influence the performance of this scheme.
If the fund managers increase the allocation to mid-cap and small cap, it will make the scheme a risky proposition and expose the portfolio to high volatility. Thus, it is suitable only for high-risk investors with long-term investment horizon. You should ensure that your investment objectives aligns with the fund.
This article first appeared on PersonalFN here
