Strategic allocations: Understanding Bajaj Finserv Flexi Cap Fund's asset allocation approach

A flexi cap fund is an open-ended equity scheme that invests across various market capitalisations, including large cap, mid cap, and small cap stocks. This flexibility in asset allocation allows these funds to capture potential opportunities in any segment of the market.

1. significance of flexible asset allocation
2. Bajaj Finserv Flexi Cap Fund asset allocation strategy
3. What Bajaj Finserv Flexi Cap Fund does not invest in
4. FAQ

The significance of flexible asset allocation

The core benefit of Bajaj Finserv Flexi Cap Fund's asset allocation lies in its flexibility. Since the fund does not commit to a fixed percentage allocation in any specific market cap, it can dynamically shift investments based on prevailing market conditions. This flexible investment approach allows the fund to capitalise on potential growth opportunities across large, mid, and small cap stocks.

Asset allocation creates the foundation for any good investment strategy. Asset allocation refers to the way an investor distributes their investments across various asset classes such as equities, debt, real estate etc.

Moreover, the Bajaj Finserv Flexi Cap Fund has a provision in its Scheme Information Document to venture into foreign securities, REITs, InvITs, and derivatives. For investors, understanding this flexible approach means recognising the potential for both growth and relative stability within their investment.

Bajaj Finserv Flexi Cap Fund asset allocation strategy

Equity investments: The scheme primarily focuses on equity and equity-related instruments of large cap, mid cap, and small cap companies. This segment carries a relatively high risk profile, with a maximum allocation of 100% and a minimum of 65%.

Debt instruments: A percentage of the scheme can be invested in debt and money market instruments or units of mutual fund schemes. These are low to moderate risk, with allocations ranging from 0% to 35% depending on market conditions.

REITs and InvITs: Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) can also be part of the fund's portfolio, carrying a moderate to high risk. The fund can allocate between 0% to 10% in these instruments.

Derivatives: Investments in equity derivatives can be up to 50% of the equity assets for non-hedging purposes. Investments in fixed income derivatives can reach up to 10% of fixed income assets for non-hedging purposes.

Foreign securities and overseas ETFs: The scheme permits investments in foreign securities and overseas ETFs, adhering to guidelines set by SEBI and RBI. These can constitute up to 35% of net assets, with a cap of US $100 million for foreign securities and US $50 million for overseas ETFs. Currently, investment in overseas securities cannot be undertaken since the limits are not available. However, as and when the investment limits become available, this option can also be evaluated by the scheme.

Stock lending: The fund may invest up to 20% of its net assets in stock lending but will not allocate more than 5% of the scheme’s net assets in securities lending through one intermediary.

Repo transactions in corporate debt securities: The gross exposure to repo transactions in corporate debt securities is capped at 10% of the net assets of the scheme.

Inter-scheme investments: The fund can also invest in other schemes under the same AMC or different AMCs without charging fees. But the aggregate inter-scheme investment across all schemes should not exceed 5% of the net asset value of the fund.

What Bajaj Finserv Flexi Cap Fund does not invest in?

The scheme will not invest in certain instruments with special features and will avoid credit enhancements and structured obligations. The cumulative gross exposure across all assets should not exceed 100% of the net assets of the scheme. Should the asset allocation fall outside its specified limits, due to passive breaches, the fund manager will rebalance it within 30 business days.

FAQs:

What is Bajaj Finserv Flexi Cap Fund's primary goal?
Bajaj Finserv Flexi Cap Fund aims to generate potential long-term capital appreciation by predominantly investing in equity and equity-related instruments across market capitalisations.

Are there any investments the scheme specifically avoids?
Yes, the scheme will not invest in instruments with special features, credit enhancements, and structured obligations.

What happens if the asset allocation falls outside its specified limits?
The fund manager will rebalance it within 30 business days. If not achieved, a justification will be provided, and the Investment Committee might extend the rebalancing period.

How much can the scheme invest in equity derivatives?
The scheme can invest up to 50% of its equity assets in equity derivatives for non-hedging purposes.
By understanding the asset allocation strategy of the various schemes of Bajaj Finserv Mutual Fund, investors can make informed decisions aligning with their risk appetite and investment objectives. Always consult a financial advisor before making investment decisions.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.