Best Flexi Cap Mutual Funds to Invest in 2023 - Top Performing Flexi Cap Mutual Funds in India

It is a well-established fact that no particular market cap can turn out to be an outperformer every year. Hence, diversification across the market cap, viz. large-cap, mid-cap, and small-cap can help you to lower the impact of volatility on your portfolio and thereby earn better risk-adjusted returns. Investing in Flexi Cap Mutual Funds is a great way to diversify your portfolio across market caps and thereby maximise portfolio returns over the long run.

In this article we will be revealing PersonalFN's list of 3 best Flexi Cap Mutual Funds to invest in 2023.

Diversification across market caps enables you to earn optimal risk-adjusted returns

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*Data as of December 29, 2022
(Source: ACE MF, PersonalFN Research)
 
 

What are Flexi Cap Mutual Funds?

SEBI defines Flexi Cap Mutual Funds as equity-oriented mutual funds that invest a minimum of 65% of their assets in equity and equity-oriented instruments of companies across the market cap range without any upper or lower limit.

Depending on market conditions, liquidity conditions, and valuations, the fund manager of a Flexi-cap Fund can manoeuvre among large-caps, mid-caps, and small-cap stocks. This gives fund managers greater scope to identify alpha-generating opportunities from a large universe of stocks which can reward investors with superior risk-adjusted returns over the long term.

Examples of Flexi Cap Mutual Funds in India

AUM data as of November 30, 2022
(Source: ACE MF)
 

Flexi Cap Mutual Fund vs Multi Cap Mutual Fund: Which is better?

While both Flexi Cap Mutual Funds and Multi Cap Mutual Funds have the mandate to invest across market caps, there are a few factors that distinguish the two.

Unlike Flexi Cap Mutual Funds, Multi Cap Mutual Funds cannot follow a dynamic asset allocation approach. As per the new SEBI guidelines, a Multi Cap Fund is mandated to invest at least 75% of its total assets in equities, with at least 25% exposure each in large-cap, mid-cap, and small-cap stocks.

Best Flexi Cap Mutual Funds to Invest in 2023 – Top Performing Flexi Cap Mutual Funds in India
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Multi Cap Mutual Funds have to maintain the minimum exposure of 25% in each market cap, regardless of the market conditions. During bearish market phases, stocks in the mid-cap and small-cap segment may face liquidity constraints and high volatility. Therefore, Multi Cap Mutual Funds can witness a higher drawdown compared to Flexi Cap Mutual Funds. On the other hand, during broad-based market rallies, Multi Cap Mutual Funds can potentially outpace Flexi Cap Mutual Funds.

Meanwhile, Flexi Cap Mutual Funds have the flexibility to decrease exposure to a particular segment if the valuation/outlook turns unfavourable. Thus Flexi Cap Mutual Funds can potentially generate stable returns across market phases.

That said, over the long term, both categories can reward investors with superior gains since they have the freedom to select from a large universe of stocks. Accordingly, investors can opt for either Flexi Cap Mutual Funds or Multi Cap Mutual Funds based on their risk-taking ability.

[Read: Multi-cap Fund v/s Flexi-cap Fund: Which is a Better Fit for Your Portfolio?]

Favourite stocks of Flexi Cap Mutual Funds

Graph
Data as of November 30, 2022
(Source: ACE MF)
 

Who should invest in Flexi Cap Mutual Funds?

Most Flexi Cap Mutual Funds usually hold around 65-75% of their assets in Large Cap Funds. This makes Flexi-cap funds suitable for investors looking to invest in a large-cap-oriented fund along with tactical allocation to mid-cap and small-cap stocks. Invest in the category with a horizon of at least 5 years. However, if you are willing to take higher risks for better returns, you can consider investing in multi-cap funds.

 

How to invest in Flexi Cap Mutual Funds?

Opt for the SIP route to invest regularly and systematically when you invest in the best Flexi Cap Mutual Funds. Investing via SIP helps to reduce the impact of shocks of a volatile equity market vide rupee-cost averaging and, at the same time, helps you compound wealth over a long period.

[Read:  5 Key Benefits of Investing in Mutual Funds via SIP]

Finally, when you invest in Flexi Cap Mutual Funds, prefer the Direct Plan over the Regular Plan. The lower expense ratio of a Direct Plan can help you yield better returns over the long run.

 
Table 1
 

How does PersonalFN identify the best and top-performing Flexi Cap Mutual Funds for investment?

With over 30 Flexi Cap Mutual Funds available for investment, you may find it challenging to select the best scheme for your portfolio. That is why we at PersonalFN have identified 3 best Flexi Cap Mutual Funds to invest in 2023 using our proprietary SMART Score Matrix. We select mutual funds on the basis of 5 variable tests, viz. Systems and Process, Market cycle performance, Asset management style, Risk-reward ratios and Performance Track Record. So, each fund recommended by PersonalFN is identified through our stringent process, where they are tested on these five essential parameters.

This matrix is specially developed by the in-house research team at PersonalFN, and we believe it's one of the finest and most reliable fund selection methodologies in the industry today.

Why? Because it has shown successful results over time! Identifying Long-term Players Has Been Our Specialty Always!

 

What differentiates our strategy from the rest is that it does not lay very high emphasis on a scheme's short-term performance or popularity but adopts a holistic approach to identify schemes that have the potential to stand the test of time.

Which are the best Flexi Cap Mutual Funds to invest in 2023?

Let us finally take a look at the best Flexi Cap Mutual Funds to invest in 2023.

List of best Flexi Cap Mutual Funds to invest in 2023

Scheme Name Absolute (%) CAGR (%)
1 Year 2 Years 3 Years 5 Years 7 Years
Canara Robeco Flexi Cap Fund 1.04 16.12 18.29 13.88 14.76
Parag Parikh Flexi Cap Fund -5.42 17.36 22.24 16.25 16.27
PGIM India Flexi Cap Fund -3.82 18.49 24.57 15.33 16.03
Past performance is not an indicator for future returns
Data as of December 29, 2022. Direct plan - Growth option considered
(Source: ACE MF)
 

Best Flexi Cap Mutual Fund to Invest in 2023 #1 - Canara Robeco Flexi Cap Fund

Launched in September 2003, Canara Robeco Flexi Cap Fund holds a well-diversified portfolio spread across market capitalisation without any limit but with a predominant bias towards large caps. The fund endeavours to invest in high growth-oriented stocks across diverse industries. Its large-cap orientation and focus towards index heavyweights helped it sustain the past market crashes and also helped ride the subsequent market rallies.

Fund Snapshot - Canara Robeco Flexi Cap Fund

Table
Past performance is not an indicator of future returns
Portfolio data as of November 30, 2022
Returns and NAV data as of December 29, 2022. Regular Plan - Growth Option considered
(Source: ACE MF)
 

Canara Robeco Flexi Cap Fund has generated a significant lead over the benchmark and the category peers over longer time periods. Despite being an aggressive growth-oriented fund, the fund manager avoids taking momentum bets and focuses on quality stocks with solid growth potential in the long run.

The nimble approach followed by the fund helps it take advantage of quick sector rotations during positive as well as negative market conditions and even improves its chances of riding out tough market conditions.

Canara Robeco Flexi Cap Fund is backed by a process-driven fund house that employs sound risk management techniques.This enables it to rank high in terms of risk-adjusted returns compared to the benchmark and most of its peers.

Click here to read our detailed coverage of the features and performance Canara Robeco Flexi Cap Fund.

Best Flexi Cap Mutual Fund to Invest in 2023 #2 - Parag Parikh Flexi Cap Fund

Launched in May 2013, Parag Parikh Flexi Cap Fund is a value-oriented scheme in the Flexi Cap Fund category. It aims to invest in quality stocks across market caps available at reasonable or attractive valuations. The fund also holds some exposure to the stocks of offshore companies such as Microsoft Corporation, Alphabet Inc, Amazon, Meta, and Suzuki Motor Corp to offer geographical diversification.

Fund Snapshot - Parag Parikh Flexi Cap Fund

Table
Past performance is not an indicator of future returns
Portfolio data as of November 30, 2022
Returns and NAV data as of December 29, 2022. Regular Plan - Growth Option considered
(Source: ACE MF)
 

The superior stock-picking ability has driven the performance of the fund. Over the past few years, Parag Parikh Flexi Cap Fund has delivered superior returns and has generated substantial alpha over its benchmark Nifty 500 - TRI and also outpaced most of its category peers.

Known for its cautious investment approach Parag Parikh Flexi Cap Fund has been able to efficiently limit the downside risk during depressed market conditions. Moreover, the fund has stood among the category toppers during various bull phases.

The focus towards value stocks available at a decent margin of safety has helped Parag Parikh Flexi Cap Fund keep the overall volatility low, while its above-average performance has helped it to generate superior risk-adjusted returns for its investors.

Click here to read our detailed coverage of the features and performance of Parag Parikh Flexi Cap Fund.

Best Flexi Cap Mutual Fund to Invest in 2023 #3 - PGIM India Flexi Cap Fund

Incepted in March 2015, PGIM India Flexi Cap Fund was an ordinary performer in its initial years, wherein it managed to generate returns in line with the benchmark. Nonetheless, the fund witnessed a turnaround phase after the mid-cap and small-cap crash of 2018. the market crash of 2018 and 2020 provided it with an opportunity to add some quality businesses in the mid-cap and small-cap segment. This, along with its inclination towards large-caps enabled it to benefit from the broad-based market rally seen between 2020-2021.

Fund Snapshot - PGIM India Flexi Cap Fund

Table
Past performance is not an indicator of future returns
Portfolio data as of November 30, 2022
Returns and NAV data as of December 29, 2022. Regular Plan - Growth Option considered
(Source: ACE MF)
 

PGIM India Flexi Cap Fund now stands among the top quartile performers in the category over longer time periods. The superior performance in the last few years has also enabled it to score high in terms of risk-adjusted returns. Even though the fund does not have a very long performance record, its performance in the market phases it has witnessed so far is encouraging.

PGIM India Flexi Cap Fund follows an active investment strategy; it holds many of its stocks with a short-term view to capitalise on the various opportunities available in the market. Accordingly, the fund's portfolio turnover ratio is usually on the higher side.

Though the fund may at times struggle to keep pace with the benchmark, it has the potential to reward investors with superior gains over complete market cycles.

Click here to read our detailed coverage of the features and performance of PGIM India Flexi Cap Fund.

​This completes our list of the 3 best Flexi Cap Mutual Funds to invest in 2023. The only thing left to do now is to invest in these best Flexi Cap Mutual Funds and benefit from diversification across market caps.

If you wish to have super compressive and detailed research reports on the best diversified equity mutual funds to invest in, subscribe to PersonalFN's premium research service, FundSelect.

PersonalFN'sFundSelect service provides insightful and practical guidance on the mutual fund schemes to Buy, Hold, and Sell. You will also get access to special reports, which include our latest exclusive report on Factor-based Investing.

At PersonalFN, we apply a host of qualitative and quantitative parameters using the S.M.A.R.T score matrix.

S - Systems and Processes

M - Market Cycle Performance

A - Asset Management Style

R - Risk-Reward Ratios

T - Performance Track Record

The stringent process has helped our valued mutual fund research subscribers to own some of the best mutual fund schemes in their investment portfolio with a commendable long-term performance track record. PersonalFN's service is apt if you are looking for insightful guidance and recommendations on some worthy funds having high growth potential in the years to come.

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Disclaimer:

The schemes mentioned above are selected on the basis of PersonalFN's SMART Score, which considers various quantitative and qualitative parameters to arrive at fundamentally sound and reliable mutual fund schemes. These schemes may or may not be suitable for you. Hence, it is necessary that you understand your risk appetite and suitability well in case you consider investing in any of these funds. If unsure, do consult your SEBI registered investment advisor.

This does not constitute investment advice. Returns mentioned herein are in no way a guarantee or promise of future returns. Mutual Fund Investments are subject to market risks, read all scheme-related documents carefully before investing.

 

Warm Regards,
Divya Grover
Research Analyst