Should You Invest In New Flexi Cap Funds?

A track record helps understand the kind of risks the fund is taking, how well it does in a bear market and bull market, according to Salonee Sanghvi, founder of My Wealth Guide. In a new fund or AMC, you only know the broad strategy and mandate, but you don’t know whether the strategy is actually going to work. A good fund manager will definitely add confidence, she told NDTV Profit.

“However, if there are sufficient funds already available in the category with a proven track record, I would rather consider those. Even if there are unique strategies, it is advisable to wait and observe if the scheme proves successful, before investing in those funds,” Sanghvi advised investors on new AMCs.

There is nothing to worry as flexi-cap schemes are here to stay and will do even better, according to Santosh Joseph, founder of Germinate Investor Services LLP. “I like all the new funds that have come in the last 12 months. All of them come with great experience,” he said.

“The markets themselves broadly have actually grown quite a bit. With an AUM of Rs 50 lakh crore, the mutual fund industry has grown, leading to the emergence of several funds with a strong track record and performance to become large funds,” Joseph said.

He lists the pros of the new mutual funds:

  • Allocate new or incremental money.

  • Don’t stop and exit funds because they are large.

  • Large funds deliver good returns.

  • New and small funds don’t guarantee better returns.

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