Flexi-cap funds have been among the favourites for investors. And for good reason. Flexicaps invest across largecaps, midcaps, and smallcaps dynamically without any upper or lower limit giving unit holders much needed diversification.
Moreover, the fund manager is not bound by a rigid mandate (as in the case with multi-cap funds), and this characteristic provides you, the investor, a blend of stability and growth.
When the fund manager believes small- and mid-caps (SMIDs) are overvalued, a dominant portion is shifted to largecap stocks, and vice versa when there are growth or wealth-creation opportunities in SMIDs.
It is this inherent flexibility that allows a flexi-cap fund to adapt to volatile times seamlessly.
Data reveals that two years ago, flexi-cap fund managers were more aggressive – chasing midcaps and smallcaps in the endeavour to clock better returns.
But after the froth in midcaps and smallcaps in late 2024, most flexi-cap funds booked profits in these high-risk segments and skewed their portfolios toward large caps for stability amid heightened volatility.
Even now, a majority of flexi-cap funds have an allocation of over 70% to large caps.
In other words, flexi-cap fund managers in India have made a significant shift to safety.
But the question is: Has this opportunistic and agile approach rewarded investors?
Well, the answer is not straightforward.
Some flexi-cap funds have fared very well, some average, and some have disappointed.
If you have been investing in flexi-cap funds via the Systematic Investment Plan (SIP) route – which helps mitigate interim volatility with rupee-cost averaging and instils discipline – here’s how the data looks.
SIP Returns of Flexi Cap Funds
| Flexi Cap Funds | 3-Yr SIP (%) | 5-Yr SIP (%) | 10-Yr SIP |
| Top performer | 6.9 | 14.0 | 18.0 |
| Bottom performer | -10.8 | 1.1 | 7.8 |
| Category Median | 2.1 | 7.9 | 12.9 |
| Motilal Oswal Nifty 500 Index Fund* | 1.1 | 7.0 | — |
| Nippon India Index Fund – Nifty 50 Plan* | 0.3 | 5.6 | 10.6 |
Growth and Direct Plan for all open-ended flexi-cap funds considered.
*These index funds have been taken for comparison as they have the least expense ratio and the long performance track record in the category.
SIP returns are calculated as XIRR; Data as of 30 March 2026.
Source: valueresearchonline.com
The key takeaway is that there is noticeable divergence between the top and bottom performers. Some funds have been a delight, while others have been a disappointment.
In other words, there is a stark difference or a performance gap in SIP returns across time periods.
Moreover, not all flexi-cap funds have been able to outperform the category median, the Nifty 500 index fund, and the Nifty 50 index fund (as represented by the corresponding Index funds).
SIP Isn’t a Sure Shot Rewarding Strategy
SIP is a mode of investing in mutual funds systematically and regularly. SIP sahi hai (is right), but it is not a safe investment plan.
You need to go the extra mile to select a mutual fund scheme prudently so that it proves to be a rewarding experience.
HDFC Flexi Cap Fund: The Winner on 3-Year and 5-Year SIP Returns
The data shows that on 3-year and 5-year SIP returns, HDFC Flexi Cap Fund (the second-largest flexi-cap fund in India with an AUM of over Rs 1 trillion) has topped the list with a 6.9% and 14.0% XIRR as of 30 March 2026.
Not only has it outperformed the category median by a wide margin, but it has also significantly overshadowed the Nifty 500 index fund and the Nifty 50 index fund.
HDFC Flexi Cap Fund holds a fairly diversified portfolio of currently 59 stocks, of which around 84% are in largecaps and 8% each in midcaps and smallcaps.
As per the February 2026 portfolio, the top 10 stocks account for 48.3% and include names such as ICICI Bank, Axis Bank, HDFC Bank, SBI, SBI Life Insurance Company, etc.
Among sectors, the fund has a higher weightage to banks & financial services, auto & auto components, and pharma & healthcare, among others.
The fund’s portfolio price-to-earnings (PE) ratio of 23.1 and price-to-book (PB) ratio of 3.2 indicate that it is quite value-conscious but also seeks growth at a reasonable price.
Moreover, to reap the full growth potential of stocks in the portfolio, the HDFC Flexi Cap Fund follows a strict buy-and-hold strategy. This is indicated by the low portfolio turnover ratio in the last year, which has ranged from 9% to 33%.
The fund has been quite selective of the companies it invests in. It has considered those companies that have achieved or are expected to achieve above-average growth, enjoy distinct competitive advantages, and have superior financial strength.
In terms of style, the fund has followed a blend of growth and value investing to generate optimal returns.
Which Other Flexi-cap Funds Have Outperformed On 3-Year and 5-Year SIP Returns?
Some that have noticeably outperformed the category median and the Nifty 500 Index Fund are:
Quant Flexi Cap Fund: The Winner on 10-Year SIP Return
The Quant Flexi Cap Fund (which manages an AUM of Rs 6,354 crore) has clocked an 18.0% XIRR and topped the list on a 10-year SIP.
However, it should be noted that this scheme was originally launched in September 2008 as the Escorts Power and Energy Fund. Later, it was renamed to Quant Consumption Fund in 2018 after being acquired by the Quant Group, before finally becoming the Quant Flexi Cap Fund in January 2022.
So, the fund transitioned from a sector & thematic fund to a flexi cap fund, and long-term performance is not really comparable.
Nonetheless, over the last four years, the fund has followed the flexi-cap investment mandate. The fund follows quant Mutual Fund’s VLRT (Valuations, Liquidity, Risk, and Timing) framework, and being aggressive, has been able to generate alpha.
Much of the fund’s high returns have come on the back of active rotations and momentum plays, rather than a buy-and-hold approach, as followed by the prominent peers.
Currently, the fund has around 32 stocks, of which 78% are largecaps, 15% midcaps, and 7% smallcaps.
As per the February 2026 portfolio, the top 10 stocks account for 56.6% and include names such as Aurobindo Pharma, Samvardhana Motherson International, Adani Power, Adani Enterprises, etc.
As regards sectors, banking & financial services, energy & utilities, and auto & auto components are among the top sectors.
The portfolio PE and PB of the quant flexi cap fund are currently around 25.5 and 3.4, slightly above their category peers.
The fund has demonstrated robust growth and established an unbeatable performance track record in recent years.
Which Other Flexi-cap Funds Have Outperformed on 10-Year SIP Returns?
HDFC Flexi Cap Fund and Parag Parikh Flexi Cap Fund have also clocked appealing 16.3% and 17.3% XIRR and outperformed the category median and the Nifty 500 index by a remarkable margin.
Likewise, there are others such as:
The bottom line
While SIPs help mitigate the volatility and market corrections make sure you buy units at a lower net asset value (NAV), they do not guarantee you appealing returns. The returns also depend on when you started your SIP.
Plus, if you invested in an ill-considered or wrong scheme, there’s a good chance you’ll be let down. Hence, never make the mistake of buying any mutual fund scheme out there.
Select your scheme prudently based on a host of quantitative and qualitative factors, not just the historical returns, which may not necessarily be repeated in the future.
Also consider the risk involved, the risk-adjusted returns, the portfolio characteristics and quality, the fund manager’s credibility, the expense ratio charged, and the investment process & system followed at the fund house, among a host of other factors.
Above all, choose schemes that are in congruence with your personal risk profile, broader investment objective, the financial goals you are addressing, and the time in hand to achieve those envisioned goals.
Be a thoughtful investor. Invest sensibly.
Happy investing!
Note: We have relied on data from www.valueresearchonline.com, www.financialexpress.com, and the factsheets published by the respective fund houses throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
SIP returns data as of 30 March 2026. Direct Plan and Growth Option Considered. AMFI SIP data is as of 28 February 2026.
Disclaimer:
Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.
Rounaq Neroy has over 20 years of experience in the financial markets and investments. He is a close observer of the Indian economy and writes deeply on the capital markets, mutual funds, stocks, precious metals, asset allocation, wealth management, and investment strategy. His editorials provide interesting, actionable investment ideas to guide readers in the journey of wealth creation and make wise decisions. Rounaq was the Head of Content at PersonalFN (Quantum Information Services Pvt. Ltd.), which also owns Equitymaster.com – India’s oldest and trusted equity research house.
