New Delhi, June 4 -- The Securities and Exchange Board of India defines a flexi-cap fund as an open-ended equity scheme that invests across large-cap, mid-cap, and small-cap stocks with no fixed minimum allocation to any segment. The category was introduced in November 2020, carved out specifically to give fund managers freedom to move between market-cap segments without the 25% per segment floor that governs multi-cap funds.

A focused equity fund is defined by a single structural constraint: a maximum of 30 stocks in the portfolio at any point in time. Like flexi-cap funds, the focused category carries no restriction on which market-cap segments those stocks may come from. The defining characteristic is not where it invests, but how man...