Nippon India Flexi Cap Fund: Is It a Worthy Proposition?

Aug 02, 2021

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The highly anticipated normalization of economic activities, revival in corporate earnings, high liquidity & lower rates, supportive global sentiment, faster pace of vaccination, and continued policy support from the government and RBI have contributed to an optimistic outlook in the Indian equity markets.

The current market conditions are favourable for investing in the Flexi cap category of equity-oriented mutual funds. Notably, the changes in economic activities could lead to fluctuations in the performance of various segments. However, investors may take advantage from such opportunities by diversifying their funds across market capitalization and sectors.

A Flexi cap fund can adapt to varied market scenarios by dynamically investing across market caps. It is a potential one-stop solution to capture the opportunities across large, mid, and small caps. Therefore, having such a combination in your portfolio would help you benefit from the growth potential of mid and small caps along with the stability of large caps.

Nippon India Mutual Fund has launched Nippon India Flexi Cap Fund it is an open-ended dynamic equity scheme investing across large-cap, mid-cap, small-cap stocks.

On the launch of this fund, Mr Saugata Chatterjee, Co-Chief Business Officer at Nippon Life India Asset Management Ltd. said, "The launch of Nippon India Flexi Cap Fund adds to our wide range of investor-centric products and deepens our offerings for the investor community. Flexi Cap is one of the largest categories in the equity space. The total AUM under the newly created Flexi cap category stood at Rs 1.76 trillion as of June-end. With Nippon India Flexi Cap Fund, we aim to deliver better returns by investing in best opportunities across market caps."

Table 1: Details of Nippon India Flexi Cap Fund

Type An open-ended dynamic equity scheme investing across large cap, mid cap, small cap stocks. Category Flexi cap Fund
Investment Objective The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity securities & equity related securities and the secondary objective is to generate consistent returns by investing in debt and money market securities. The fund will have the flexibility to invest in a broad range of companies with an objective to maximize the returns, at the same time trying to minimize the risk by reasonable diversification. However, there can be no assurance that the investment objective of the scheme will be realized, as actual market movements may be at variance with anticipated trends.
Min. Investment Rs 500/- and in multiples of Re 1 thereafter. Additional Purchase Rs 100/- and in multiples of Re 1 thereafter. Face Value Rs 10/- per unit
SIP/SWP/STP Available
Plans
  • Direct
  • Regular
Options
  • Growth
  • Income Distribution Cum Capital Withdrawal (IDCW)
Entry Load Not Applicable Exit Load
  • 10% of the units allotted shall be redeemed without any exit load, on or before completion of 12 months from the date of allotment of units.
  • Any redemption in excess of such limit in the first 12 months from the date of allotment shall be subject to the following exit load, Redemption of units would be done on First in First out Basis (FIFO):
  • 1% if redeemed or switched out on or before completion of 12 months from the date of allotment of units.
  • Nil, thereafter
Fund Manager
  • Mr Manish Gunwani
  • Mr Dhrumil Shah
  • Mr Varun Goenka
  • Mr Nikhil Rungta
  • Ms Kinjal Desai
Benchmark Index NIFTY 500 TRI
Issue Opens: July 26, 2021 Issue Closes: August 09, 2021
(Source: Scheme Information Document)
 

The investment strategy of Nippon India Flexi Cap Fund will be as follows:

Nippon India Flexi Cap Fund 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 Flexi cap investment strategy will focus on stability through investing in large caps and seek growth opportunities through mid and small caps. While the fund will attempt to create alpha through the bottom-up stock selection process and appropriate allocation to potentially high growth themes, it will maintain reasonable allocations to established leaders. Accordingly, for large-caps exposure, the deviation will be capped at 50% from the benchmark weight.

For investments in equity and equity related securities, the scheme would identify companies for investment based on the following criteria amongst others:

a) Sound Management

b) Good track record of the company

c) Potential for future growth

d) Industry economic scenario

For investments in debt securities, income may be generated through the receipt of coupon payments, the amortization of the discounts on debt instruments, or the purchase and sale of securities in the underlying portfolio.

The fund will have the flexibility to invest in a broad range of companies with an objective to maximize the returns, at the same time trying to minimize the risk by reasonable diversification.

Under normal circumstances, the asset allocation will be as under:

Table 2: Asset Allocation of Nippon India Flexi Cap Fund

Instruments Indicative Allocation (% of net assets) Risk Profile
Minimum Maximum High/Medium/Low
Equity and Equity related Instruments 65 100 Medium to High
Debt & Money Market Instruments 0 35 Low to Medium
(Source: Scheme Information Document)
 

Who will manage Nippon India Flexi Cap Fund?

Mr Manish Gunwani, Mr Dhrumil Shah, Mr Varun Goenka, Mr Nikhil Rungta, and Ms Kinjal Desai for overseas investments will be the dedicated fund managers for this scheme.

Mr Manish Gunwani is CIO - Equity Investments at Nippon Life India Asset Management Ltd. His qualifications include B.tech and PGDM and he has over 22 years of experience in capital markets. Prior to this he was associated with ICICI Prudential Asset Management Company Ltd. as Fund Manager-Equity, Vicisoft Technologies as Head-India operations, Lehman Brothers as Sr. Analyst, Brics Securities as Sr. Analyst, Lucky Securities as Analyst, Vicisoft Securities as Co-founder, SSKI Securities as Analyst, Prime Securities as Analyst.

The other schemes he manages are Nippon India Balanced Advantage Fund, Nippon India Capital Builder fund - IV series B, Nippon India Growth Fund, and Nippon India Multi Asset Fund.

Mr Dhrumil Shah is a Fund Manager at Nippon Life India Asset Management Ltd. He is a C.A and B.com graduate with an experience of over 13 years in equity research and investments. Prior to this he has worked with Birla Sun Life Insurance as AVP Investments, Equity Fund Management and Research, with ASK Investment Managers as Portfolio Manager, Equity Fund Management and Research.

Additionally, he manages Nippon India Capital Builder Fund IV - Series B and Nippon India Growth Fund.

Mr Varun Goenka is Co-Fund Manager and Research Analyst at Nippon Life India Asset Management Ltd. His qualifications are BBA, Executive Program in Financial Engineering - Indian School of Business, Hyderabad and Certificate Program in Financial Markets, Prof. Robert Shiller - Yale University.

Prior to joining Nippon Life AMC, Mr Goenka was associated with JM Financial Ltd./ JM Morgan Stanley Pvt Ltd. as AVP Equities, Anand Rathi Securities Pvt Ltd. as AVP Equities, and Goenka Capital Markets Family Office as Business Analyst and NGO - AIESEC, India. The other schemes he manages are Nippon India Capital Builder Fund IV - Series C and Nippon India Capital Builder Fund IV - Series D.

Mr Nikhil Rungta is Co-Fund Manager - Equity and Research Analyst at Nippon Life India Asset Management Ltd. He is a C.A, MBA (Finance) and FRM and has over 12 years of experience in equity markets. Prior to this he was associated with Bajaj Allianz Life Insurance Company as Investment Manager and Research Head - BFSI, Anand Rathi Shares & Stock Brokers Ltd. as Head - Banks & Financial Services, Standard Chartered Securities (India) Ltd. as Equity Research Analyst, Religare Capital Markets Ltd. as Equity Research Analyst, and Moody's Investor Service - ICRA Ltd. as Senior Rating Analyst.

He also manages the Nippon India Capital Builder Fund IV - Series C and Nippon India Capital Builder Fund IV - Series D.

Ms Kinjal Desai is Fund Manager - Overseas Investment at Nippon Life India Asset Management Ltd. She has over 7 years of experience in financial services industry and she has been working as Associate Equity Investments at NAM India assisting Lead Analyst in Equity Research, idea generation and sector monitoring, assisting Fund Managers in stock selection, and monitoring of overseas investments.

Ms Kinjal's qualification is MSc (Economics) and the other schemes she manages for overseas investments are Nippon India Japan Equity Fund, Nippon India US Equity Opportunities Fund, Nippon India ETF Hang Seng BeES, and Nippon India Multi Asset Fund.

Fund Outlook - Nippon India Flexi Cap Fund

Nippon India Flexi Cap Fund will leverage the emerging opportunities by primarily investing across market capitalization. The scheme offers investors diversification by dynamically shifting between the market cap segments large cap, mid cap and small cap based on prevailing market conditions and evolving opportunities.

The scheme assesses fundamental, macro, and sentiment factors to decide on market cap allocation. It aims for reasonable allocation to established sector leaders and prudent risk management measures with an attempt to create optimal returns.

This scheme provides flexibility for fund managers to actively invest across market caps. It invests in large cap stocks that tend to limit the downside risk and bring stability to the portfolio during market volatility. The focus will be on core growth and new age businesses through mid-cap and small-cap stocks.

However, the performance of this scheme will depend on the fund manager's ability to construct a portfolio that provides a combination of stability and growth with optimal returns. Considering the market trends and opportunities, the fund manager may increase the exposure to mid-cap and small-cap stocks.

The portfolio will be prone to higher volatility making this a risky investment proposition. Therefore, ensure you have a high-risk appetite, a long investment horizon and your investment objectives align with the fund.

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Warm Regards,
Mitali Dhoke
Jr. Research Analyst

 

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