A flexi cap fund is one of the equity plans that can invest in companies of all sizes: large, mid, and small. It does not have to fix how much it will invest in each category. The fund manager has the freedom to freely change the mix of investments depending on market conditions.
However, the fund must still follow several SEBI guidelines, norms, and its own declared investment objectives. These rules ensure the fund operates transparently and protects investors’ interests. Also, they prevent the fund from taking excessive risk or deviating from the purpose it was created for.
Already an investor? Want to check whether your flexi-cap mutual fund is sticking to its mandate? This article provides a simple 5-point checklist for verifying whether your flexi-cap fund is operating within the policy boundaries.
Lastly, if you are looking for fresh investments, you will learn about the Tata Flexi-cap fund and its several features.
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Is Your Flexi-Cap Mutual Fund Compliant? 5 Point Checklist for Every Investor!
Flexi fund schemes may be ideal for investors who want long-term potential capital growth without limiting themselves to only one segment of the market. However, since these funds have no fixed allocation limits and can invest in small and mid-sized companies, they carries highest risk.
Therefore, investors must ensure that their chosen flexi-cap fund operates within SEBI’s guidelines and its declared investment objectives. The following five-point checklist lets you verify whether your flexi-cap mutual fund remains compliant, transparent, and capable of delivering consistent returns:
#Check 1: Does Your Flexi-Cap Fund Have the Minimum Equity Exposure?
As per the SEBI guidelines, flexi cap mutual funds must invest at least 65% of their total money in equity and equity-related instruments. The remaining portion can be held in other assets (say, commodities, debt) or cash.
But why? The purpose is to make sure the scheme remains an equity product and delivers the risk-return profile investors expect from an equity fund.
How to Verify Compliance?
Check the fund’s latest factsheet or portfolio statement. They list the percent allocation to equities versus debt/cash. If you see equity exposure below 65% for a quarter, contact the asset manager for an explanation.
#Check 2: Is Your Flexi-Cap Fund Investing in Multiple Market Segments?
A flexi-cap fund must hold stocks from large, mid, and small market-capitalisation segments, with no fixed split. In this check, you verify whether the fund actually moves money across these segments rather than staying stuck in one category.
How to Verify Compliance?
Review the allocation across market caps in at least four consecutive “portfolio reports”. This analysis will confirm whether the allocation is dynamic.
Additionally,
Inspect top holdings and sector concentrations. Always remember that repeated heavy weights to one cap or a single sector may increase risk.
Read the fund manager’s commentary and try to understand why shifts were made and whether those moves match the fund’s stated objective and your risk tolerance.
#Check 3: Is Your Flexi-Cap Fund Following the Portfolio Disclosure Standards?
Regulations and the Scheme Information Document (SID) require regular public disclosure of holdings + compliance items. Timely disclosure is the primary way you confirm a fund follows rules and its own promises.
How to Verify Compliance?
Firstly, you may collect these documents:
Monthly portfolio statements
Key Information Memorandum
Scheme Information Document
Factsheet that summarises recent allocations.
Now, confirm whether the published holdings and percentages match these collected documents. Also, check for compliance items such as:
Related-party exposures
Sector limits
Turnover notes
If disclosures are missing or inconsistent, contact the fund house’s investor services. If your issue remains unresolved, you may escalate through the official grievance channels.
#Check 4: Is There Single Investor Dominance in Your Flexi-Cap Fund?
In a flexi fund, SEBI requires a minimum of 20 investors and that no single investor holds more than 25% of the fund’s corpus (measured on a calendar-quarter average). This rule prevents any one investor from controlling a scheme.
If any investor exceeds 25%, the fund gets one month to rebalance. Thereafter, the investor is given 15 days’ notice to redeem the excess. If the excess is not redeemed, the flexi-cap fund itself will redeem that portion at the applicable NAV on the 15th day.
In another case, if the fund has less than 20 investors (on average) during a quarter, the scheme may be wound up and units redeemed at NAV under Regulation 39(2)(c).
How to Verify Compliance?
To verify compliance, collect the fund’s:
Now, in these documents, look for investor concentration data and top-unit-holder tables. If figures are unclear, contact the AMC’s investor relations. You may also use SEBI grievance channels, if necessary.
#Check 5: Is Your Flexi-Cap Fund Consistently Performing?
Always remember that in the first place, you invested to grow your funds! Besides compliance, you should also get a decent flexi cap fund return, although no scheme can guarantee it.
To eliminate the risk that your fund is not “underperforming”, compare its returns with the declared benchmark and with peer flexi-cap funds over multiple periods: 1 year, 3 years, 5 years, and since inception (SEBI Specified Period for performance disclosure).
Additionally, You May Perform the Following Assessments:
Method / Metric | Meaning | Interpretation | Importance |
Rolling Returns | These are average returns calculated for overlapping time periods (say, 1-year rolling over 5 years). | Stable and consistent rolling returns indicate steady performance across market cycles.
| Using it, you can identify consistency rather than one-time performance spikes. |
Sharpe Ratio | Represents the return earned per unit of risk taken. | A higher ratio means better risk-adjusted returns. | It shows whether the fund is rewarding investors adequately for the risk involved.
|
Alpha | It is the excess return compared to the benchmark (after adjusting for risk).
| Positive alpha means the fund has outperformed its benchmark. | It indicates the fund manager’s skill in generating returns beyond market expectations. |
Standard Deviation | It measures volatility, or how much returns fluctuate.
| Lower values suggest more stable performance. | Using it, you can assess the overall risk level of the fund. |
Maximum Drawdown | It represents the largest fall from a peak to a low point during a period.
| Usually, smaller drawdowns show better downside protection. | You can analyse them to learn how the fund behaves in market declines. |
What are Flexi Cap Funds? – Meaning and Examples
Want to Invest in a Flexi Fund in 2025? Check Why Tata Flexi-Cap Fund May Be one of the schemes Worth Considering!
The Tata Flexi Cap Fund is an open-ended dynamic equity scheme investing across large-cap, mid-cap, and small-cap stocks . The investment objective of the scheme is to generate capital appreciation over the medium to long term. However, there is no assurance or guarantee that the investment objective of the scheme will be achieved.
For more clarity, let’s check out some of its main features:
A) How Easily Can You Redeem Your Units?
Tata Flexi Cap Fund is an open-ended scheme. Investors can redeem (sell) their units at the NAV-based price on any business day. Normally, redemption proceeds are paid within three working days.
However, you may incur an exit load of 0.50% if redeemed within 30 days of investment. There is no exit load after 30 days.
B) What Benchmark Does the Scheme Follow?
The performance of the Tata Flexi Cap Fund is compared against the Nifty 500 Total Return Index (TRI). It represents India’s top 500 companies listed on the National Stock Exchange (NSE). The index uses the free-float market capitalisation method to select these companies and is rebalanced twice a year to include the most relevant and liquid entities.
| Feature | Details |
| No. of Constituents | 501 Companies |
| Selection Basis | Full market capitalisation from the eligible universe |
| Calculation Method | Free-float market capitalisation |
| Base Date | January 1, 1995 |
| Base Value | 1000 |
| Calculation Frequency | Real-time |
| Index Rebalancing | Semi-annually (twice a year) |
| Variants |
|
C) How Does the Fund Disclose its Net Asset Value (NAV)?
The NAV is calculated and published daily on the Tata Mutual Fund™ and AMFI websites, usually by 11 p.m. If there is a delay beyond the start of the next business day, the fund must issue a public explanation. Investors who have registered email IDs receive monthly and half-yearly portfolio statements within 10 days of the respective period’s end.
D) How Does the Scheme Allocate Its Assets?
Under normal conditions, the fund may invest its money in the following way:
| Instrument Type | Minimum Allocation | Maximum Allocation | Risk Profile |
| Equity and related instruments | 65% | 100% | High |
| Debt and money market instruments | 0% | 35% | Low to Medium |
| Units of REITs and InvITs | 0% | 10% | Medium to High |
E) How Risky is the Tata Flexi-Cap Fund?
Investors must note that their capital could be exposed to “very high risk”. This scheme may generate capital appreciation over the long term and could suit investors with a very high risk tolerance limit.
Conclusion
So now, you know about the 5-point checklist, through which you can easily identify whether your flexi cap fund is meeting its mandate. If we were to revise, you can verify compliance by checking:
The fund maintains at least 65% investment in equity and equity-related instruments (as per SEBI guidelines).
It makes dynamic allocations across large, mid, and small-cap stocks (not in fixed proportions).
The fund maintains at least 20 investors, with no single investor holding over 25% of total assets.
The Scheme Information Document (SID) clearly states the investment policy and risk profile.
The fund’s performance aligns with its benchmark and peer group over multiple periods.
If you are searching for a flexi cap category scheme, the Tata Flexi Cap Fund may be an option worth considering. It is available in Regular and Direct plans with Growth and IDCW (Income Distribution cum Capital Withdrawal) variants. The scheme also offers investment options through both SIP and lump sum modes.
Disclaimer
None of the Tata Mutual Fund Schemes offers guarantee and/or assurance for the returns, performance & capital invested. The scheme risk classification is “Very High”.
*Mutual Fund Investments are subject to market risks, please read all scheme related documents carefully.
