Best Flexicap Mutual Funds to Invest in 2022

Best Flexicap Mutual Funds to Invest in 2022

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). 

flexicap funds

                  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 

  1. What are Flexicap Mutual Funds? 
  2. Difference Between Flexicap and Multicap Mutual Funds 
  3. Long-Term Performance of Flexicap Mutual Funds 
  4. Taxation of Flexicap Funds 
  5. 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 – 

  1. 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). 
  2. 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. 
  3. 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. 
  4. 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. 
  5. 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. 

So, in short, flexi-cap funds are open-ended equity funds which invests a minimum 65% across stocks of large, mid and small cap companies dynamically. 

Now before we move ahead, let us quickly understand the key differences between a Flexicap mutual fund and a multi-cap mutual fund. 

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- 

nippin

                        *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. 

Parag Parekh

                        *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%

To get exposure to all three market capitalisation, you are paying a total expense ratio of 5.80%. This is because three different fund managers are managing your money and have to be paid. Now all this can be eliminated if you simply invest in a Flexicap fund. So, instead of investing in individual funds, you decide to invest in DSP Flexicap Fund – one of the best Flexicap mutual funds in 2022. The fund invests as follows –  

DSP

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. 

Let us now take a look at the five best Flexicap mutual funds in 2022. 

5 Best Flexicap Mutual Funds in 2022

MF

  1. Parag Parikh Flexicap Fund 
  2. UTI Flexicap Fund 
  3. IDFC Flexicap Fund 
  4. DSP Flexicap Fund 
  5. 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%

Parag Parikh Flexicap Fund also gives you exposure to overseas stocks. These include 8.59% allocation in Alphabet Inc Class A, 7.65% in Microsoft Corporation, 7.08% in Amazon and 6.05% in Facebook. 

Let us take a look at the historical performance of Parag Parikh Flexicap Fund (as on 13th December 2021) 

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%

Reasons why Parag Parikh Flexicap Fund is the best Flexicap fund in 2022 – 

  1. The fund has generated an alpha of 11.92% over its peers and benchmark.  
  2. 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%. 
  3. The fund has a Sharpe ratio of 1.32% against benchmark Sharpe ratio of 0.73%. 
  4. The funds expense ratio is 1.82%. This is 52% lower than the expense ratio of other Flexicap funds. 
  5. 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%

Let us now take a look at the historical performance of UTI Flexicap Fund (as on 14th December 2021)

UTI

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%

Reasons why UTI Flexicap Fund is one of the best Flexicap mutual funds in 2022 – 

  1. The fund has generated an alpha of 6.38% over its peers and benchmark.  
  2. The fund’s standard deviation of 21.08% is lower than benchmark standard deviation of 21.92%. 
  3. The fund has a Sharpe ratio of 1.01% against benchmark Sharpe ratio of 0.73%. 
  4. The funds expense ratio is 1.81%. This is 57% lower than the expense ratio of other Flexicap funds. 
  5. 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. 

The third best Flexicap mutual fund in 2022 is IDFC Flexicap Fund. 

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 look at the historical performance of IDFC Flexicap Fund (as on 14th December 2021)

IDFC

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%

Reasons why IDFC Flexicap Fund is one of the best Flexicap mutual funds in 2022 – 

  1. The fund has a low standard deviation (20.24%) against benchmark standard deviation of 21.92%. 
  2. The fund has a Sharpe ratio of 0.60%. 
  3. The funds expense ratio is 1.94%. This is 58% lower than the expense ratio of other Flexicap funds. 
  4. The funds turnover ratio of 21%. This is 53% lower than the turnover ratio of its Flexicap peers. 

Best Flexicap Mutual Fund in 2022 #4: DSP Flexicap Fund

DSP Flexicap Fund is the fourth best Flexicap mutual fund in 2022. It was launched in April 1997 and has given one of the best returns of 19.80% since inception. The fund has generated a one-year return of 35.41% against benchmark return of 34.72%. The fund invests in the following sectors – 

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%

Let us now take a look at the historical performance of DSP Flexicap Fund (as on 14th December 2021)

DSP Flexicap

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%

Reasons why DSP Flexicap Fund is the fourth best Flexicap fund in 2022 – 

  1. The fund has generated an alpha of 3.71% over its benchmark. 
  2. The fund has a low standard deviation (21.60%) against benchmark standard deviation of 21.92% 
  3. The fund has a Sharpe ratio of 0.87%. 
  4. The funds expense ratio is 1.92%. This is 56% lower than the expense ratio of other Flexicap funds. 
  5. The funds turnover ratio is 28%. This is 37% lower than the category average. 

And finally, the fifth best Flexicap mutual fund in 2022 is Motilal Oswal Flexicap Fund. 

Best Flexicap Mutual Fund in 2022 #5: Motilal Oswal Flexicap Fund. 

The fifth best Flexicap mutual fund in 2021 is Motilal Oswal Flexicap fund. It invests in 30 stocks and follows a large-cap growth-oriented strategy. The fund is bullish toward the financial sector with a 36.59% exposure. The fund invests in the following sectors – 

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%

Unlike its peers, the fund does not invest in FMCG, chemicals, metals and textiles stocks. This is one of the reasons for its lacklustre performance in the last one-year. But the fund holds fundamentally strong stocks and is solid for the long-term. Let us look at some of the key ratios of Motilal Oswal Flexicap Fund – 

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%

Reasons why Motilal Oswal Flexicap Fund is the best Flexicap fund in 2022 – 

  1. The fund has a low standard deviation (21.48%) against benchmark standard deviation of 21.92% 
  2. The fund has a Sharpe ratio of 0.39%. 
  3. The funds expense ratio is 1.78%. This is 50% lower than the expense ratio of other Flexicap funds. 
  4. The funds turnover ratio is 30%. This is 41% lower than the Flexicap category average. 

Despite high returns, please remember that Flexicap mutual funds are not suitable for all investors. They carry high risk. This is because the fund manager can move exposures from large-cap to mid and small-cap stocks on his will. Hence, you must analyse your risk profile and financial goals before investing in Flexicap funds. The ideal thing to do is to invest in the best Flexicap mutual funds in 2022 as they have a proven track record and invest in solid stocks. 

Now that you have decided to invest in the best Flexicap mutual funds in 2022, the next question is, should you invest lumpsum or do a systematic investment plan? Our advice is don’t do either! Instead of SIP do SmartSIP

SmartSIP is a unique proprietary feature provided by RankMF. It helps you earn superior long-term returns by investing double the SIP amount when the scheme is undervalued. Similarly, when the scheme is overvalued, your SIP is invested in liquid funds. This is done to ensure that you do not buy equity schemes when they are expensive. 

Are you wondering if SmartSIP really makes any difference? The below graph might help. Suppose you invest Rs 5,000 every month in UTI Flexicap Fund with a SIP and a SmartSIP. Your corpus after 5,10 and 20 years will look like this –  

mff

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). 

So, stop wasting your hard-earned money and invest in the best Flexicap mutual funds in 2022 with India’s best stockbroker Samco Securities. Open a FREE Demat account today and get unlimited access to RankMF – India’s best mutual fund investment platform. And don’t forget to check out the SmartSIP feature to create a much superior corpus!

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1 Comment

  1. Bishan S Dixit

    I like utmost all your recommended stocks but the main problem is where is the money. We can hardly buy 5 to 10 stocks of the recommended companies

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