Flexi and multi cap funds are two such options which are quite popular among investors. Both invest in the equity market, but their strategies are different. To make the right choice, it is important to understand the difference between them.

Flexi cap funds are as flexible as the name suggests. This fund can invest simultaneously in large, mid and small cap companies. The fund manager has the freedom to change investments according to market conditions. That is, when risks increase in big companies. So he can shift to mid or small cap.

The biggest advantage of this fund is its diversified portfolio. Investment in this is spread across many sectors and companies. Due to which the risk is reduced. Even if the market falls, fund managers can limit losses by changing their strategies. This is a much better option for long term investors.

The distribution of investment in multi cap fund is fixed. According to SEBI rules, the fund has to invest at least 25% in large, mid and small cap companies. That is, the balance of companies of every size is maintained in these funds. Which provides both growth and stability.

In these funds, investment remains stable as the stake in each segment is fixed. Large cap companies provide stability. Whereas mid and small caps increase growth. This maintains the balance of the portfolio. Investors who want good returns with balanced risk. This is the right option for them.

If you want the fund to adjust itself according to market fluctuations. So flexi cap fund would be better. Whereas if you prefer stable investment with fixed structure. So multi cap fund would be right. Both of these are good for long term investment. Just select according to your risk ability.