Find The Best Flexi Cap Fund For Your Portfolio

TITLE: Find the Best Flexi Cap Fund for Your Portfolio CHANNEL: ET Money DATE: 2025-08-03

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Over the years, flexiap funds have become an important category of funds. The category has 40 funds, which means almost every fund house has flexicap scheme. It has highest assets under management among all equity funds. Together, these 40 schemes have 4.94 lakh cr of investors money. Not just that, but this category consistently receives the highest inflows compared to any other category. But choosing a flexi fund can be confusing. By definition, flex cap funds are supposed to be opportunistic funds. Based on the market cycle, they should move between large, mid and small cap stocks. However, these 40 funds come in different shapes and sizes. Many of the funds behave like large caps with majority of them investing in the country’s biggest companies. Some can seem very aggressive, investing heavily in mid and small caps. So, how do you pick one? And if you already have invested in a flexiap fund, what should you expect from them in terms of performance, risk, and strategy? Well, that’s what we will discuss today.

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Hello and welcome to Edmony’s YouTube channel. In this video, we will decode all the flexiap funds in India using five key filters. First, we will look at allocation to large caps. Second, exposure to mid and small caps. Three, how frequently the fund churns its portfolio. Fourth, how each scheme performs during bull markets. And fifth, how well it protects capital during market corrections. Now, this will help you understand the style of each fund. You can then choose a fund that fits your needs and risk appetite. Now, we’ll be discussing a lot of funds. Don’t treat any of them as a recommendations. At 80 Money, we always encourage you to do your own research before investing.

Okay. So let’s begin with a quick but important brush off on flexiap funds. As per se regulations, flexiap funds must invest at least 65% of their total assets in equities. But unlike large cap, midcap or even multicap funds, there are no restrictions on how this equity portion is divided across market capitalizations. In other words, the fund manager has complete flexibility to invest in large cap, midcap, and small cap stocks in any proportion. Now, this freedom may sound idle and in many ways it is, but it’s also the very reason flexiap funds can look and behave very differently from one another. Now, some funds choose to invest mainly in Nifty 100 index stocks, behaving more like a traditional large cap fund. Others take bold positions in mid and small caps, aiming for higher growth but with higher volatility. And some funds shift their allocations frequently depending upon the fund manager’s market outlook. Now this wide variation means that just looking at the category name tells you very little about how the fund actually invests. And that’s why it is essential to understand the underlying strategy before you decide to invest. Now on your screen is a quick comparison that shows how flexiap funds differ structurally from other equity categories. Undoubtedly while the structure gives flexicap funds complete freedom, how they actually use it varies widely. One of the clearest ways to see that is by looking at where they invest. That is how much they allocate to large, mid and small cap stocks. This will help us understand the fund’s underlying style, its risk profile, and the kind of investor it is best suited for.

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Okay, let’s begin with allocation to large caps. This is a key indicator of whether a flexiap fund behaves like a large cap or a more aggressive fund. Now on your screen is the table that shows funds which have high allocation to large caps. So what we see here is consistency. Funds like SDFC flexiap caneco flexi caps have maintained a minimum of close to 70% in large caps. clearly positioning themselves as stable blue chip oriented portfolios. These may be suited for investors who prefer predictability and capital preservation. But not all flexiap funds are this consistent. Look at the detailed table on your screen showing the minimum and maximum allocation by flexiap funds to large cap stocks. The difference column represents how much the allocation has varied over time. So as you can see funds like GM flexiap have moved between 37% and 94% of 57 percentage point swing. Similarly funds like Modila roal flexiap, Mahindra Manu flexiap and bandan flexiap have also have a wide range of allocation shifts. Now this indicates a high degree of active tactical management. This could be either based on fund managers market outlook or a model that suggests which segment is more attractive. Now this is a very dynamic approach that attempts to capitalize on changing opportunities across market cycles. Now compare that to UTA flexicap. This fund has stayed within a narrow 11oint band ranging from 55% to 66%. Similarly other funds like Canada Robeco Flexiap Flexiap Franklin India Flexiap and others have shown limited variation. This shows a more measured and consistent approach to portfolio construction. Here the fund manager has a stable asset allocation philosophy and sticks to it through market phases. These funds are likely better suited for investors who prefer predictability over tactical shifts. So a fund that has maintained a narrow range suggest strategy consistency and predictability. On the other hand, funds where the allocation to large caps varies widely implies opportunistic allocation and higher flexibility. Such schemes are suitable for investors who are comfortable with dynamic portfolio shifts.

All right. Just like how we looked at the flexi cap funds allocation to large caps, let’s next look at their mid and small cap exposure. While large cap forms a stable core of most portfolios, it is the mid and small cap stocks that typically deliver outsized gains during bull markets. However, this comes with significantly higher risk. Now in the context of flexi cap funds the degree to which a fund allocates to mid and small caps becomes a clear reflection of how aggressively or conservatively it is positioned. Let’s examine the data. On your screen is a table that shows the maximum and average allocation of various flexiap funds to midcap and small cap stocks in January 2018. For funds launched later we have considered data since their inception. Now as you can see funds like Bank of India Flexiap, Quant Flexiap and Bundan Flexiap have consistently maintained very high exposure to mid and small caps. That’s well above the category average. Now until mid 2023, Flexiap funds generally allocated 20 to 30% to mid and small caps. Now Quand has even gone up to 70% in this segment while Bank of India has averaged nearly 47% since inception. Now, these are the funds that are clearly positioned for aggressive growth and may be more suited for investors with a higher risk tolerance. Next, let’s explore how much this allocation changes over time because it’s not just how much exposure a fund takes, but how consistently it maintains that exposure. This shows us the fund style. Now, the table on your screen shows the range between maximum and minimum, mid and small cap allocation for each fund. You can see how their exposure to this segment have swung over time. Now this range is quite broad. For example, JM Flexiap’s swing from just 1% to 60% in mid and small cap indicates a very tactical approach. The fund manager is making significant shifts based on changing market conditions. Now this may work well in some periods but it also introduces more uncertainty for the investor. In contrast, schemes from UTI, Cotek, Franklin India and Canarco show relatively low variation. They typically operate within a tight 10 to 15% range. Now, these funds reflect a more consistent and long-term allocation approach, which some investors may prefer if they value stability and predictability. So, to sum it up, if a fund has higher average allocation or a higher variation, you can consider it as an aggressive or opportunistic scheme. On the other hand, if the average allocation is moderate and the variation is low, it indicates a more stable and process-driven allocation. Now understanding this behavior is essential because a flexi cap fund that consistently behaves like a midcap fund carries very different risk return characteristics than one that stays anchored in large caps.

All right. So now that we’ve understood how flexiap funds differ in terms of their allocation to large, mid and small cap stocks, let’s move to another important dimension. Let’s examine how frequently a fund buys and sells stocks. This indicates how active or stable a fund’s investment strategy truly is. We can understand the frequent buying and selling using a parameter called the turnover ratio. A high turnover ratio indicates frequent changes in holdings often signaling a momentumdriven or tactical strategy. On the other hand, a low turnover ratio suggests a long-term conviction-led investment approach. So on your screen is the latest data on turnover ratios for Flexica funds as of April 2025. On top of the list, Sham Flexiap fund stands out with an exceptionally high turnover ratio of 582. Now, this suggests the fund is actively trading throughout the year, potentially reshuffling its entire portfolio multiple times. Similarly, Quant Flexiap fund and Samco Flexicap fund also exhibit very high turnover pointing towards a momentum or tactical investing style. Now contrast that with funds like UTA flexiap KC flexiap parak flexiap and sdfc flexiap all of these maintain turnover ratios well below 35%. Now these funds clearly adopt a buy and hold approach placing greater emphasis on conviction long-term fundamentals and minimizing transaction costs.

All right now that we’ve examined how flexica funds are structured and how actively they are managed let’s look at what truly matters to most investors and that’s their performance. We’ll start by evaluating how these funds perform when markets are rising. In other words, how well they capture upside during bull phases. Now, the metric used for this is the upside capture ratio. It tells us how much a funds now rises when its benchmark goes up by 100%. A ratio above 100 means that the fund has outperformed its benchmark during upswings and a ratio below 100 means it has underperformed. On your screen is how Flexica funds stack up based on three-year data between 22nd May 2022 and 22nd May 2025. From the table we can see that funds like J Flexicap, Bank of India, Flexiap Quant and Modila Ross will stand out for their ability to participate in rallies. These funds have delivered more than 15 to 20% higher returns than the benchmark during uptrending markets. This indicates an aggressive positioning often linked to higher allocations in mid and small caps or more opportunistic stock selection. In contrast, funds like Parak Parak Flexiap, SB Flexiap, UTF flexiap and others have recorded upside capture ratios well below 90. This suggests a conservative approach possibly due to large cap orientation or a value style approach or global diversification. However, it’s important to note that a high upside capture does not automatically mean a fund is better. It simply indicates how aggressively a fund plays a rising market. It’s a valuable data point, but one that needs to be paired with how the fund behaves during down markets, which we will look at next.

We’ve seen how some flexap funds aggressively capture upside when markets rise. But equally important and often more telling is how they perform and the markets decline. This is where the downside capture ratio comes into play. It measures how much a fund falls when its benchmark drops by 100%. A ratio below 100 means the fund has declined less than the benchmark offering some protection during downturns. The lower the ratio, the better the downside protection. Now, usually funds that fall less when markets correct tend to deliver better returns over the long term. On your screen is a table showing the downside capture ratios for flexiap funds based on three-year data between 22nd May 2022 and 22nd May 2025. From this data, funds like Parak Parak Flexiap, SGFC Flexiap, IC potential flexiap and Tata Flexiap fund stand out with downside capture ratios well below 80. Now this means that they have consistently fallen less than the market in downturns offering meaningful protection during volatile or bearish periods. Now this kind of downside protection typically may be a result of three things. One, a more conservative asset allocation favoring large caps or defensive stocks. Two, a low churn and long-term investing style. And three, risk management strategies that are built into funds framework. Now on the other hand, funds like Quant, Bank of India, Shirram, Samco Flexiap and Taurus Flexiap have downside capture ratios above 110. This means they often fall more when markets correct. Now these patterns are critical for investors to understand. A fund with high upside ratio but poor der protection ratio may appear attractive during bull phases. However, it can sharply erode the capital when markets fall. Conversely, fund that limits losses during corrections are better suited for investors who prioritize capital preservation and long-term compounding.

So we now evaluated flexiap funds across multiple dimensions. We started with their allocation to large caps. Then we covered variability in allocation, portfolio churn and performance during both bull and bare markets. Now every investor is different and may prefer a fund that suits their preferences. What works for someone with high risk appetite and long-term horizon may be entirely unsuitable for someone who seeking relatively less volatility and more stability in their returns. So let’s translate these styles into practical guidance. We will map typical fund behaviors to typical investor types.

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We have now looked at how flexible funds differ in terms of allocation, consistency, churn, and performance across market cycles. But ultimately, these metrics only matter when you match them to the kind of investor you are. So, if you’re a relatively conservative investor who values stability, you would prefer funds with high large cap exposure, low variation in allocation, low churn, and strong downside protection. These funds aim for steady compounding rather than chasing market rallies. Examples include SDFC flexi cap, cot flexi cap, parag flexiap. All of these maintain consistent portfolios and manage downside well. For a relatively aggressive investor, the priorities are different. You are comfortable with higher volatility. Now for those investors, you might prefer funds that actively shift their market cap exposure, take bold mid and small cap bets and aren’t afraid to churn the portfolio. Funds like GM Flexiap, coin flexiap and bank of India flexi cap fall into the bucket. Now they’re designed to capture upside during bull markets even if means deeper draw downs when markets correct. And then there are investors who prefer process over momentum. They’re not looking for dramatic swings. Instead, they prefer consistent and disciplined investing that compounds wealth over time. In such cases, funds like Parakar, UT flexiap, and IC potential flexiap line well. These funds typically show low turnover, stable allocation patterns and a balanced approach across cycles. Now the key takeaway is this. In flexigap category, strategies varies far more than structure. So rather than chasing past returns, evaluate whether the fund’s underlying behavior matches your investment temperament. That alignment is what leads to better long-term outcome and a more comfortable investing experience. And well, if all this sounds overwhelming, you can use the Eton money app to screen funds by these very metrics, helping you look beyond returns and find the Flexicap fund that truly fits you. And with this, we have come to the end of this video. I hope you found this video useful, and if you did, please share it with your friends and family. We’ll be back soon with another video. Till then, take care.

Mutual fund investments are subject to market risks. Read all scheme related documents carefully.