While they seem similar, the main difference lies in their allocation flexibility.
Flexicap mutual funds can invest in companies of any size (small-cap, mid-cap, or large-cap) and in any proportion. There’s no fixed allocation, so the fund manager has complete freedom to adjust the investments based on market conditions and opportunities.
Multicap mutual funds, on the other hand, invest across small, mid, and large-cap companies, but they have a fixed structure. By regulation, they must allocate at least:
- 25% of their total money to small-cap companies,
- 25% to mid-cap companies,
- and 25% to large-cap companies.
So while both funds spread their investments across different company sizes, multicap funds have specific minimum requirements, while flexicap funds are more flexible.