Flexi-Cap Funds Meaning, Benefits, and Top Flexi Cap Mutual Funds to Invest Now

Flexi-cap funds, one item from the mutual fund world, serve you the full platter of stocks, i.e., large-cap, mid-cap, and small-cap stocks. When you might be confused about which dish from the stock market, flexi cap mutual funds can solve your dilemma. You can taste the stable business model of large-cap stocks and the growth potential of mid-cap and small-cap stocks in these funds. In this blog, we’ll understand the meaning of flexi-cap funds in detail and know the top flexi-cap mutual funds.

Flexi-Cap Fund Meaning

Flexi-cap funds, associated with the world of equity funds, have to invest at least 65% of their collected money in equities and related instruments. These funds are free to invest in varied stocks across industries. This versatile approach makes them an attractive investment option for all newbie investors.

While multi-cap and flexi-cap funds look similar from the diversification lens. The key difference between the two is that multi-cap funds have to invest at least 25% each in large-cap, mid-cap, and small-cap stocks. But the flexi-cap funds are free to invest all 65% in large-cap or all in small-cap stocks.

Also read: Difference between Multi Cap and Flexi Cap Funds

This makes the flexi-cap funds better as the fund manager can freely make the changes and the portfolio can withstand market volatility or corrections.

Best Flexi-Cap Mutual Funds to Invest for 5 Years

Here is the list of the 10 top flexi-cap mutual funds (Direct-Growth) to invest in for the long term:

Flexi-Cap Funds	Benchmark	Fund Size (in ₹ crores)	1 Year Returns (%)	5 Year Returns (%)		Expense Ratio (%)
			Fund	Benchmark	Fund	Category Avg	Fund
Parag Parikh Flexi-Cap Fund	Nifty 500 TRI	₹81,918.72	29.90%	19.04%	25.59%	0.79%	0.63%
Quant Flexi-Cap Fund	Nifty 500 TRI	₹7,513.82	33.09%	19.04%	32.34%	0.72%	0.59%
JM Flexi-Cap Fund	BSE 500	₹4,721.61	43.60%	17.66%	24.71%	0.79%	0.45%
HDFC Flexi-Cap Fund	Nifty 500 TRI	₹64,928.56	37.01%	19.04%	23.53%	0.72%	0.77%
Edelweiss Flexi-Cap Fund	Nifty 500 TRI	₹2,364.93	38.07%	19.04%	21.99%	0.72%	0.45%
PGIM India Flexi-Cap Fund	Nifty 500 TRI	₹6,337.68	22.38%	19.04%	21.93%	0.72%	0.42%
Union Flexi-Cap Fund	BSE 500 TRI	₹2,233.82	22.22%	19.12%	19.97%	0.79%	0.88%
DSP Flexi-Cap Fund	Nifty 500 TRI	₹11,788.58	29.93%	19.04%	19.90%	0.79%	0.72%
Canara Robeco Flexi-Cap Fund	BSE 500 TRI	₹12,901.37	28.05%	19.12%	19.53%	0.72%	0.55%
Axis Flexi-Cap Fund	Nifty 500 TRI	₹12,666.25	29.19%	19.04%	16.18%	0.72%	0.69%

*(Data as on November 14, 2024)

Overview of the Top Flexi-Cap Mutual Funds

Here are the details of the 10 best flexi-cap mutual funds (as on November 14, 2024):

1. Parag Parikh Flexi-Cap Fund

Parag Parikh Flexi-Cap Fund NAV is ₹85.74. The minimum SIP amount is ₹1,000 while the lump sum investment is ₹1,000. The fund’s alpha is 4.07 and beta is 0.70.

By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Parag Parikh Flexi-Cap Fund would grow to approx ₹1.22 lakhs.

2. Quant Flexi-Cap Fund

Quant Flexi-Cap Fund NAV is ₹106.28. The minimum SIP amount is ₹1,000 while the lump sum investment is ₹5,000. The fund’s alpha is 5.44 and beta is 1.09.

By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Quant Flexi-Cap Fund would become more than ₹1.49 lakhs.

3. JM Flexi-Cap Fund

JM Flexi-Cap Fund NAV is ₹113.17. The minimum SIP amount is ₹100 while the lump sum investment is ₹1,000. The fund’s alpha is 10.85 and beta is 0.92.

By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in JM Flexi-Cap Fund would become around ₹1.18 lakhs.

4. HDFC Flexi-Cap Fund

HDFC Flexi-Cap Fund NAV is ₹2,005.44. The minimum SIP amount is ₹100 while the lump sum investment is ₹100. The fund’s alpha is 8.40 and beta is 0.88.

By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in HDFC Flexi-Cap Fund would become approx ₹1.15 lakhs.

5. Edelweiss Flexi-Cap Fund

Edelweiss Flexi-Cap Fund NAV is ₹42.21. The minimum SIP amount is ₹100 while the lump sum investment is ₹100. The fund’s alpha is 3.95 and beta is 0.98.

By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Edelweiss Flexi-Cap Fund would become approx ₹1.09 lakhs.

6. PGIM India Flexi-Cap Fund

PGIM India Flexi-Cap Fund NAV is ₹39.31. The minimum SIP amount is ₹1,000 while the lump sum investment is ₹5,000. The fund’s alpha is -3.91 and beta is 0.91.

By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in PGIM India Flexi-Cap Fund would become more than ₹1.09 lakhs.

7. Union Flexi-Cap Fund

Union Flexi-Cap Fund NAV is ₹53.40. The minimum SIP amount is ₹500 while the lump sum investment is ₹1,000. The fund’s alpha is 0.13 and beta is 0.86.

By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Union Flexi-Cap Fund would become more than ₹1.03 lakhs.

8. DSP Flexi-Cap Fund

DSP Flexi-Cap Fund NAV is ₹109.61. The minimum SIP amount is ₹100 while the lump sum investment is ₹100. The fund’s alpha is 0.50 and beta is 0.98.

By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in DSP Flexi-Cap Fund would grow to ₹1.03 lakhs.

9. Canara Robeco Flexi-Cap Fund

Canara Robeco Flexi-Cap Fund NAV is ₹355.95. The minimum SIP amount is ₹100 while the lump sum investment is ₹5,000. The fund’s alpha is -0.55 and beta is 0.90.

By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Canara Robeco Flexi-Cap Fund would grow to approx ₹1.02 lakhs.

10. Axis Flexi-Cap Fund

Axis Flexi-Cap Fund NAV is ₹27.53. The minimum SIP amount is ₹100 while the lump sum investment is ₹100. The fund’s alpha is -3.48 and beta is 0.92.

By investing ₹1,000 every month through SIP for 5 years, your total investment amount of ₹60,000 in Axis Flexi-Cap Fund would become more than ₹92 thousand.

Pros of Flexi Cap Mutual Funds

After knowing the flexi-cap fund meaning and the 10 best funds, let’s know the key advantages of investing in these funds:

1. Full Basket of Stocks

Flexi cap mutual funds come with a straightaway benefit of diversification. By purchasing a single unit of a fund, you get a full basket of stocks of different market caps, risk levels, return potential, and industries.

2. Flexibility to Invest

The fund manager is free to choose the stocks, market caps, or sectors and actively manages the portfolio allocation. This helps in managing risk over a long period of time and the fund can generate alpha-based returns with the upper hand of professionals.

3. Adaptable

These equity funds are adaptable to different market conditions and the fund manager can invest in trending sectors that can give higher returns. These funds can offer attractive returns and reduce the risk of overexposure to small-cap stocks’ volatility and the large-cap stocks’ sluggish performance.

4. Good for Long-term Investment

Investors looking to invest for at least a 5-year period and have a moderate to high-risk profile can invest in these flexi-cap funds. These mutual funds can be added to the equity section of the investor’s portfolio with the benefit of automated rebalancing.

Cons of Flexi Cap Mutual Funds

Some of the side-effects of flexi-cap funds that you need to know before considering them:

1. Fund Manager Bias

The fund manager is the one who makes all the decisions to invest in which type of stock and sector. Any wrong decision due to analysis or bias can affect the overall returns of the fund.

2. Concentration Risk

There may be times when the fund manager invests largely in small-cap stocks exposing the flexi cap mutual funds to high risk. To avoid risk, there are chances that he allocates majorly to large-cap stocks and loses the chances of growth. So, these funds are exposed to concentration risk of market cap or sector.

3. May Not Align Perfectly with Investor Preference

The fund manager’s decision to invest in manufacturing stocks may not align with your analysis of growing renewable stocks. This can lead to unalignment between the investor choice and the flexi cap fund portfolio. With no control over the portfolio creation, flexi-cap funds may not be ideal for the investor who wants to make his own decision.

Taxation Rule of Flexi Cap Mutual Funds

The long-term capital gains (LTCG) from flexi-cap funds with a holding period of more than 12 months are taxed at a flat rate of 12.5%. If the total LTCG earnings (from all the equity investments) are equal to or less than ₹1.25 lakhs in a financial year, then you are not supposed to pay any tax.

The short-term capital gains (STCG) with a holding period of equal to or less than 12 months are taxed at a flat rate of 20%.

Also read: Complete Guide on Capital Gains Tax on Shares and Mutual Funds

Conclusion

Flexi-cap funds, introduced in November 2020, are famous among investors for the flexibility they offer and investment across large-cap, mid-cap, and small-cap stocks. They are adaptable to market conditions and can invest in different sectors or industries. For someone having a long-term investment, these funds can be a good choice as they can generate market-based returns.

But while investing in any mutual fund, it is better to do your research and keep your investment objective in mind. Open Demat account with SMC Global Securities and keep investing in stocks, or mutual funds like a pro.

FAQs

1. What is a flexi cap fund?

A flexi cap fund is a type of equity mutual fund that invests across large-cap, mid-cap, and small-cap stocks and provides diversification benefits.

2. Which is the best Flexi Cap fund?

Some of the best flexi-cap mutual funds are Quant Flexi-Cap Fund, JM Flexi-Cap Fund, and HDFC Flexi-Cap Fund.

3. How is the performance of Parag Parikh Flexi Cap Fund?

Parag Parikh Flexi Cap Fund has generated 29.90% and 25.59% returns in the last 1 and 5 years, respectively.

References:
https://www.smctradeonline.com/invest/mutual-funds
https://www.mutualfundssahihai.com/en/what-are-flexi-cap-funds

Author: All Content is verified by SMC Global Securities.