Flexicap Mutual Funds are having a great year. In the last one-year, Flexicap mutual funds have generated an average return of 33.46% (as of 15th December 2021). Indian mutual fund investors are clearly in awe of Flexicap mutual funds. This is visible from the fact that flexi cap mutual funds have received the maximum inflow from investors. In November 2021, Rs 2,660 crore was invested in Flexicap mutual funds. This is the highest among all other mutual fund categories.
Flexicap mutual funds were introduced by the Securities and Exchange Board of India (SEBI) in November 2020. And in just over a year, they have become the second most preferred mutual fund type in terms of assets under management (AUM).
Source: AMFI Date: 15th December 2021
As per the Association of Mutual Funds in India (AMFI), the AUM of flexi cap funds is a whopping Rs 2.21 lakh crore (as of November 2021). This is nearly on par with the AUM of large-cap funds which is Rs 2.23 lakh crore. It seems Indian investors have put their faith and hard-earned money in Flexicap mutual funds. Now before you too invest in Flexicap funds, you first need to understand what are Flexicap funds. But that’s not all. We will also be revealing the list of best Flexicap funds in 2022.
In this article on Best Flexicap Mutual Funds in 2022
- What are Flexicap Mutual Funds?
- Difference Between Flexicap and Multicap Mutual Funds
- Long-Term Performance of Flexicap Mutual Funds
- Taxation of Flexicap Funds
- List of 5 Best Flexicap Mutual Funds in 2022
What are Flexicap Mutual Funds?
Flexicap mutual funds are open-ended equity oriented mutual funds which invests a minimum of 65% of its assets in equity stocks. But stocks from which market capitalisation? This is what makes Flexicap funds interesting. Flexicap mutual funds are dynamically managed. This means that the fund manager has the freedom to invest across large, mid and small-cap stocks dynamically. Let us split this definition of Flexicap funds and understand each component in detail –- Flexi-cap funds are open-ended in nature. This means that you can buy and sell units of Flexicap funds anytime without any restrictions. This is not possible in the case of close-ended fixed maturity plans (FMPs).
- Flexi-cap funds are equity-oriented. This means that the fund manager will use the corpus to buy equity shares of companies listed on the stock exchange.
- Flexi-cap funds invest 65% of the corpus in equity stocks. The fund manager is free to invest the balance 35% in cash or debt instruments.
- Flexi-cap mutual fund can invest in stocks of large, mid and small-cap companies. This is not the case with a pure large-cap fund as it can only invest in top 100 companies. Same for mid-cap mutual funds. But flexi-cap funds give you access to all three market caps with a single fund.
- Flexi-cap funds are dynamically managed. Now what does this mean? This means that the fund manager can shift 100% to large-cap stocks or mid-cap stocks depending upon the current market conditions.
Difference Between Flexicap and Multicap Mutual Funds
A lot of investors believe that Flexicap and Multicap mutual funds are one and the same. But this is not true. A Flexicap mutual fund has the freedom to invest in stocks across market capitalisation. So, the fund manager can choose to invest 70-80% of the corpus in large-cap stocks during market downturns. But multi-cap mutual funds cannot do so. Multi-cap mutual funds have to compulsorily invest 25% each in large, mid and small-cap stocks. Another difference between Flexicap and Multicap mutual fund lies in their equity allocation. A Flexicap mutual fund can invest a minimum of 65% of its assets in equity shares. Whereas a Multicap mutual fund must invest 75% of its assets in equity shares. Let us take a real-life example to understand this key difference between Flexicap and multi-cap mutual funds. Nippon India Multicap Fund is a popular Multicap fund. The pie chart below shows its portfolio as of November 2021-
*Source: RankMF **Portfolio as of November 2021
Notice that the fund invests a minimum of 25% in each large, mid and small-cap category. Now imagine that the fund manager wants to reduce small-cap exposure to 15%. Can he do this? No, because he must invest minimum 25% in large, mid and small cap stocks each.
Let us now look at the portfolio of a pure Flexicap fund - Parag Parikh Flexicap Fund. This is also one of the best Flexicap mutual funds in 2022.
*Source: RankMF **Portfolio as of November 2021
Notice the allocation of Parag Parikh Flexi cap fund. It invests only 3.27% in small cap and 14.39% in mid cap stocks. This is because the fund manager has the freedom to dynamically manage the portfolio. But the fund manager of a multi-cap mutual fund cannot do this. He cannot invest less than 25% in mid or small-cap stocks even if the market conditions warrant this action.
This restriction is one of the major reasons why investors have migrated from multi-cap mutual funds to Flexicap mutual funds. The stock market is never kind to just one type of stocks. During market downturns, mid and small cap stocks bleed. But large-cap stocks do well. Now imagine if you have invested in only midcap stocks and the market falls. Your entire investment will suffer. This can be avoided by simply investing in Flexicap mutual funds. Here the loss in mid or small-cap is compensated by the stability of large-cap stocks.
Let us now take a look at the advantages of Flexicap mutual funds.
Advantages of Flexicap Mutual Funds
1. Exposure across Market Capitalisation: A Flexicap mutual fund gives you exposure to large, mid and small cap stocks. This is not possible when you invest in a pure large-cap or midcap mutual fund. When you invest in a large-cap fund, your investment is limited to the top 100 stocks listed in the market. When you invest in a mid-cap fund you can only invest in 101st to 250th stocks in the market. But when you invest in a Flexicap fund, you get to invest in large, mid and small cap stocks with a single fund. So, you get thrice the benefit with just one investment. 2. Portfolio is Managed Dynamically: Can you predict which stocks will perform this year? or do you know for sure if the market will go up or down? Obviously not. Now imagine that the overall market is down and you are holding a pure midcap mutual fund. It is quite expected that your fund will lose money. During market downturns, large-cap funds offer stability. But you are not holding any exposure to large-cap fund. So, this is a double whammy for you. You are losing money in midcap fund and you are not making money from large cap funds. This is where Flexicap funds are a huge advantage. A Flexicap fund invests across market capitalisation. So, even if the midcap stocks are falling, the large-cap portion of your fund will make money. This reduces your overall loss. This dynamic management by an experienced fund manager is instrumental in you generating superior returns. 3. Lower Expense Ratios: Imagine that there is no Flexicap fund in the market. What do you do to get exposure to every market capitalisation? You buy three different mutual funds – large, mid and small cap funds. Your portfolio might look like this -| Fund | Expense Ratio | Large-cap | Mid-cap | Small-cap |
| DSP Top 100 Equity Fund – Regular - Growth | 2.07% | 76.64% | 23.37% | 0.00% |
| DSP Midcap Fund – Regular - Growth | 1.83% | 14.63% | 80.68% | 4.70% |
| DSP Small cap Fund – Regular – Growth | 1.90% | - | 39.81% | 60.18% |
| DSP Flexicap Fund – Regular – Growth | 1.90% | 58.36% | 32.43% | 9.21% |
Notice that DSP Flexicap fund gives you similar exposure to all three market caps. The best part is that you are paying an expense ratio of just 1.90%. So, basically your expense ratio is down from 5.80% to 1.90%. These are some of the key advantages of Flexicap mutual funds.
Taxation of Flexicap Mutual Funds
Flexicap mutual funds are equity mutual funds. Hence, they follow equity taxation where the holding period is 12 months.- If you sell your Flexicap fund units before 12 months, you have to pay a short-term capital gains tax (STCG) of 15%.
- If you sell your Flexicap fund units after 12 months, you will pay a 10% long-term capital gains tax but only if your gains are above Rs 1 Lakh in the financial year.
5 Best Flexicap Mutual Funds in 2022
- Parag Parikh Flexicap Fund
- UTI Flexicap Fund
- IDFC Flexicap Fund
- DSP Flexicap Fund
- Motilal Oswal Flexicap Fund
Best Flexicap Mutual Fund in 2022 #1: Parag Parikh Flexicap Fund
Parag Parikh Flexicap Fund is truly the best Flexicap mutual fund in 2022. The fund has given a return of 50.61% in the last one year (as of 13th November 2021). This is much higher than its benchmark return of 36.18%. Like a true flexi-cap fund, Parag Parikh Flexicap Fund invests 82.33% in large-cap stocks, 14.39% in mid-cap stocks and 3.27% in small-cap stocks. Despite being bullish on large-cap stocks, the fund has managed to outperform best large-cap funds in the last one year. The fund invests in 26 stocks with top exposure to the following sectors –| Sector | % Allocation |
| Technology | 32.21% |
| Financial | 25.23% |
| Services | 9.01% |
| Automobile | 7.13% |
| Consumer Durables | 7.08% |
| FMCG | 6.97% |
| Healthcare | 4.24% |
| Energy | 3.85% |
As you can see, Parag Parikh Flexicap Fund has managed to beat its benchmark Nifty 500-TRI by a huge margin across all time frames. This makes it the best Flexicap mutual fund in 2022. Let us look at the key data of Parag Parikh Flexicap Fund –
| Launch Date | 28th May 2013 |
| Return since launch | 21.29% |
| Benchmark | Nifty 500-TRI |
| Assets under Management | Rs 18,299 crores |
| Turnover | 17.56% |
| Expense Ratio | 1.85% |
| Exit Load | 2% exit load if units in excess of 10% redeemed within 365 days 1% exit load on redemption between 366-730 days |
| Standard Deviation | 17.75% |
| Sharpe Ratio | 1.32% |
| Sortino Ratio | 1.34% |
| Alpha | 11.92% |
- The fund has generated an alpha of 11.92% over its peers and benchmark.
- The fund has managed to generate alpha while taking lower risk. The fund has a standard deviation of 17.75% against benchmark standard deviation of 21.92%.
- The fund has a Sharpe ratio of 1.32% against benchmark Sharpe ratio of 0.73%.
- The funds expense ratio is 1.82%. This is 52% lower than the expense ratio of other Flexicap funds.
- The funds turnover ratio is 17%. This is 67% lower than the turnover ratio of Flexicap peers. This shows the fund managers conviction in his holdings.
Best Flexicap Mutual Fund in 2022 #2: UTI Flexicap Fund
UTI Flexicap fund is the second best Flexicap mutual fund in 2022. It is also one of the oldest Flexicap funds in India. It was launched in 1992 and has generated a return of 13.47% since inception. In the last one-year, the fund has given a stellar return of 38.33% (as on 14th December 2021). UTI Flexicap Fund invests in a total of 62 stocks. This is split as 63.86% in large-cap, 31.23% in midcap and 4.91% in smallcap stocks. UTI Flexicap Fund holds major exposure to the following sectors –| Sector | Allocation (%) |
| Financial | 24.77% |
| Technology | 15.71% |
| Healthcare | 14.30% |
| Services | 11.00% |
| Chemicals | 7.98% |
| Automobile | 5.92% |
| FMCG | 4.27% |
| Consumer Durables | 4.24% |
| Engineering | 2.63% |
| Construction | 2.58% |
| Metals | 1.56% |
| Textiles | 1.04% |
| Communication | 0.99% |
As you can see, the fund has managed to beat its benchmark across one, three and five-year time horizon. Let us look at some key data points of the second best Flexicap fund in 2022 – UTI Flexicap Fund –
| Launch Date | 18th May 1992 |
| Return since launch | 13.47% |
| Benchmark | Nifty 500-TRI |
| Assets under Management | Rs 24,521 crores |
| Turnover | 11.00% |
| Expense Ratio | 1.81% |
| Exit Load | 2% exit load if units in excess of 10% redeemed within 365 days |
| Standard Deviation | 21.08% |
| Sharpe Ratio | 1.01% |
| Sortino Ratio | 1.03% |
| Alpha | 6.38% |
- The fund has generated an alpha of 6.38% over its peers and benchmark.
- The fund’s standard deviation of 21.08% is lower than benchmark standard deviation of 21.92%.
- The fund has a Sharpe ratio of 1.01% against benchmark Sharpe ratio of 0.73%.
- The funds expense ratio is 1.81%. This is 57% lower than the expense ratio of other Flexicap funds.
- The funds turnover ratio of 11%. This is 77% lower than the turnover ratio of Flexicap peers. This shows the fund managers conviction in his holdings.
Best Flexicap Mutual Fund in 2022 #3: IDFC Flexicap Fund
Our next best Flexicap mutual fund in 2022 is IDFC Flexicap Fund. It is a comparatively lesser known flexi-cap fund than its peers. The fund has a low AUM of Rs 5,858 crores. Despite this, it has generated a one-year return of 33.40% against a benchmark return of 34.72%. The fund invests in the following sectors –| Sector | Allocation (%) |
| Financial | 25.41% |
| Technology | 15.12% |
| Healthcare | 3.05% |
| Services | 7.10% |
| Chemicals | 8.87% |
| Automobile | 7.48% |
| FMCG | 5.81% |
| Consumer Durables | 6.28% |
| Engineering | 2.68% |
| Construction | 6.41% |
| Metals | 3.31% |
| Textiles | 1.42% |
| Communication | 2.07% |
| Insurance | 0.89% |
Let us quickly take a look at some of the key data points of the third best Flexicap fund in 2022 – IDFC Flexicap Fund –
| Launch Date | 28th September 2022 |
| Return since launch | 17.55% |
| Benchmark | S&P BSE 500 TRI |
| Assets under Management | Rs 5,858 crores |
| Turnover | 21.00% |
| Expense Ratio | 1.94% |
| Exit Load | 1% exit load if units in excess of 10% redeemed within 365 days |
| Standard Deviation | 20.24% |
| Sharpe Ratio | 0.60% |
| Sortino Ratio | 0.57% |
- The fund has a low standard deviation (20.24%) against benchmark standard deviation of 21.92%.
- The fund has a Sharpe ratio of 0.60%.
- The funds expense ratio is 1.94%. This is 58% lower than the expense ratio of other Flexicap funds.
- The funds turnover ratio of 21%. This is 53% lower than the turnover ratio of its Flexicap peers.
| Sector | Allocation (%) |
| Financial | 34.31% |
| Construction | 8.90% |
| Technology | 7.22% |
| FMCG | 7.09% |
| Chemicals | 6.33% |
| Automobile | 5.97% |
| Healthcare | 5.57% |
| Services | 5.32% |
| Engineering | 5.04% |
| Energy | 3.80% |
| Insurance | 3.34% |
| Metals | 2.62% |
| Consumer Durables | 0.39% |
| Textiles | 0.26% |
Here are some key data points of the fourth best Flexicap fund in 2022 – DSP Flexicap Fund.
| Launch Date | 29th April 1997 |
| Return since launch | 19.80% |
| Benchmark | Nifty 500 TRI |
| Assets under Management | Rs 7,350 crore |
| Turnover | 28.00% |
| Expense Ratio | 1.92% |
| Exit Load | 1% exit load for redemption within 364 days |
| Standard Deviation | 21.60% |
| Sharpe Ratio | 0.87% |
| Sortino Ratio | 0.92% |
| Alpha | 3.71% |
- The fund has generated an alpha of 3.71% over its benchmark.
- The fund has a low standard deviation (21.60%) against benchmark standard deviation of 21.92%
- The fund has a Sharpe ratio of 0.87%.
- The funds expense ratio is 1.92%. This is 56% lower than the expense ratio of other Flexicap funds.
- The funds turnover ratio is 28%. This is 37% lower than the category average.
| Sector | Allocation (%) |
| Financial | 36.59% |
| Technology | 13.75% |
| Automobile | 10.95% |
| Insurance | 9.63% |
| Healthcare | 9.04% |
| Construction | 6.07% |
| Consumer Durables | 5.05% |
| Services | 3.88% |
| Energy | 2.39% |
| Engineering | 2.21% |
| Launch Date | 28th April 2014 |
| Return since launch | 17.55% |
| Benchmark | Nifty 500 TRI |
| Assets under Management | Rs 10,814 crore |
| Turnover | 30.00% |
| Expense Ratio | 1.78% |
| Exit Load | 1% exit load for redemption within 15 days |
| Standard Deviation | 21.48% |
| Sharpe Ratio | 0.39% |
| Sortino Ratio | 0.41% |
- The fund has a low standard deviation (21.48%) against benchmark standard deviation of 21.92%
- The fund has a Sharpe ratio of 0.39%.
- The funds expense ratio is 1.78%. This is 50% lower than the expense ratio of other Flexicap funds.
- The funds turnover ratio is 30%. This is 41% lower than the Flexicap category average.
So,
- In a period of five years, you earned 1.95% (absolute basis) more with SmartSIP.
- In a period of 10 years, your SmartSIP made you richer by 4.40% (absolute basis).
- In a period of 20 years, the difference in corpus between SIP and SmartSIP is a whopping 10.48% (absolute basis).
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