Flexi-cap mutual funds are quite popular among investors for diversified equity investment in large cap, mid-cap, and small-cap stocks. Flexi-cap mutual funds provide fund managers the ability to rebalance the portfolio according to market dynamics and economic trends.
If you are thinking of investing in flexi-cap mutual funds for creating wealth in the long run, then it becomes important to select the right fund. Some of the factors which can help you while evaluating different schemes are the historical returns, Assets Under Management (AUM), expense ratio, experience of the fund manager, diversification, and performance consistency.
Given below is the list of Top 10 Flexi-Cap Mutual Funds (Direct Growth) with their latest performance and investment information. The list can help you to compare various schemes and find out the ones which suit your financial objectives and risk profile.
Please keep in mind that past performance does not ensure future returns. Flexi-cap funds are market-related investments and are suited for investors having an equity market risk appetite.
Top 10 Flexi Cap Funds (Direct - Growth)
| Rank | Scheme Name | NAV (₹) | 1Y CAGR | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| 1 | HDFC Flexi Cap Fund | ₹2,335.94 | 4.04% | 17.65% | 16.70% | 16.56% |
| 2 | Bank of India Flexi Cap Fund | ₹42.14 | 9.43% | 19.04% | 15.74% | N/A |
| 3 | ICICI Prudential Flexi Cap Fund | ₹21.95 | 6.30% | 16.65% | 14.90% | N/A |
| 4 | Quant Flexi Cap Fund | ₹121.28 | 11.42% | 16.03% | 14.55% | 19.44% |
| 5 | Parag Parikh Flexi Cap Fund | ₹93.95 | 0.18% | 13.63% | 11.90% | 17.55% |
| 6 | Aditya Birla Sun Life Flexi Cap | ₹2,242.19 | 8.42% | 16.51% | 11.89% | 14.16% |
| 7 | Franklin India Flexi Cap Fund | ₹1,825.07 | -1.16% | 12.07% | 11.18% | 13.94% |
| 8 | Canara Robeco Flexi Cap Fund | ₹400.34 | 2.56% | 13.60% | 9.98% | 15.10% |
| 9 | JM Flexicap Fund | ₹77.38 | 1.58% | 7.98% | 7.07% | 8.04% |
| 10 | Kotak Flexicap Fund | ₹101.16 | 2.21% | 6.67% | 5.52% | 6.72% |
Who should Invest in Flexi Cap Funds?
Flexi-cap funds are most suitable for investors who prefer diversified equity investments but do not wish to choose their investment in large, mid and small cap companies since the flexi-cap mutual fund manager is free to change his/her positions among these according to prevailing circumstances, with the condition that SEBI requires that at least 65% is allocated towards equities. Flexi-cap funds are most suitable for those investors who have long-term goals of more than 5 years since equity volatility levels off over long periods of time. Flexi-cap funds are also suitable for risk-loving investors whose risk profile is moderately high to very high, with the reason being that the NAV level can fluctuate substantially within the short run. New investors in the equity market would benefit from the diversification of the single fund and investors who invest through the SIP mode would benefit from rupee cost averaging of their portfolios. Most individuals even choose flexi-cap mutual funds to form the core of their portfolios, with sectorial or foreign funds added on top.
Factors to Consider before Investing in Flexi Cap Mutual Funds
There are several factors that one must consider before investing in flexi cap mutual funds to make sure that the fund suits his/her financial objectives, investment period, and risk-taking capacity. Though these mutual funds give flexibility to invest in large-cap, mid-cap and small-cap stocks, the right choice demands careful considerations.
Investment Objectives & Period
Flexi cap funds are mostly equity-oriented investments and are usually suitable for long-term financial objectives. The investors should have an investment period of about 5-7 years to handle the market fluctuations and benefit from capital gains in the long term.
Experience of the Fund Manager
The fund manager is a key factor behind the allocation decision of the portfolio among various market capitalizations. One must check the experience, investment approach, track record, and ability of the fund manager to handle the market fluctuations.
Track Record
One must compare the track record of the fund over different time periods, such as 3 years, 5 years, and 10 years. One should also analyze the performance consistency of the fund against its benchmark and other category peers.
Asset Allocation Strategy
The flexibility that comes from allocating assets into companies with varying market capitalisation is one of the best things about flexi-cap funds. Nevertheless, there are different strategies adopted by different fund managers. See if the fund manager likes the safety of large caps or takes more risks in mid and small cap stocks for growth.
Portfolio Diversification
Look at the portfolio of the fund to see how the funds are allocated across various sectors, industries, and specific companies. Diversification will help in reducing the concentration risk. Stay away from funds with too much concentration in a single sector or few companies.
Taxation and Exit Load
Be aware of the taxation rules and exit load prior to investing. Flexi-cap funds are usually considered as equity-oriented mutual funds for taxation purposes. In addition, see if there is any exit load for the fund on redemption of units within a certain time frame.
Benefits of Investing in Flexi-Cap Funds
Flexibility in Market Capitalisations
One of the primary benefits of flexi-cap funds is that the investor or fund manager enjoys the flexibility of investing in firms of various sizes. Thus, the fund manager is free to allocate investments across the large cap, mid cap, and small cap stocks based on need.
Fund Portfolio Diversity
The flexi-cap funds make investments in firms that differ on the basis of their market capitalisation and industry sector. Thus, it ensures diversity in investment portfolio and decreases risk arising out of dependency on one category of stock.
Wealth Generation Capability
Through the use of flexi-cap funds, an investor can invest in both mature companies belonging to large cap as well as new companies of mid cap and small cap variety. This enables participation in business cycles and thus creates opportunities for wealth generation.
Suitable for SIP Involvement
Flexi-cap funds may be bought through the mechanism of SIP. It enables the investor to save in a disciplined manner through regular monthly contributions in fixed quantity.
Risks of Investing in Flexi Cap Mutual Funds
Market Risk
Market risk is associated with the risk that the market performance will have some influence over the value of the underlying security holdings in the flexi-cap funds.
Managerial Risk
A lot about the performance of flexi-cap fund relies on the managerial decisions in respect of the selection of stocks and allocating assets. Incorrect estimates, stock selection, and investment strategies can influence negatively on the fund performance in a great way.
Concentration Risk
Although a fund that offers flexi-cap features has no limitations when investing in a range of market capitalisation and sectors, nevertheless the fund might be exposed to concentration in certain industry or stocks. Poor performance in respect of such stocks will negatively influence the performance of the whole portfolio.
Short Term Fluctuations in NAV
Flexi-cap funds can show short-term fluctuations in Net Asset Value (NAV) due to market dynamics. Such short term requirements in case of need in cash will force investors to sell their securities.
No Guaranteed Return or Capital Protection
Flexi-cap mutual funds are market dependent and there is no guarantee of the capital protection and returns on it. Even those funds which showed good track record in history can underperform in future.
Conclusion
Investors who desire wealth creation through investment in large-cap, mid-cap, and small-cap companies over the long term may consider investing in flexi-cap mutual funds. Flexibility is the key advantage of these funds since they offer flexibility to shift the portfolio allocations in tune with the prevailing market conditions and growth prospects. Professional fund management and diversification of portfolios make flexi-cap funds an ideal option for equity investors.
It would be wise, however, to consider the risks of market volatility, the risks of decisions made by the fund managers, and risks of selection of stocks. Comparing the historical performance, expense ratio, portfolio allocations, and risk profile of various flexi-cap funds before making your decision will help you identify the most appropriate option for your needs. Flexi-cap funds can form part of your investment portfolio if you have a minimum investment horizon of 5-7 years.
