In the current volatile market, as investors contemplate pausing their Systematic Investment Plans (SIPs) in small-cap and mid-cap funds, mutual fund experts are recommending flexicap funds.
Investors often choose flexicap funds due to their dynamic approach, which allows fund managers to adjust asset allocation among large, mid, and small-cap stocks according to market conditions. This flexibility helps manage risk and enhance rewards, making flexicaps an appealing choice for individuals looking to create long-term wealth.
Amongst these, Parag Parikh Flexi Cap Fund stands out as the largest fund in this category, boasting an Asset Under Management (AUM) of Rs 89,703 crore as of January 31, 2025.
Launched on May 28, 2013, this flexi cap fund has consistently outperformed its benchmark and category average over various time periods. Over the past decade, the scheme has delivered a return of 17.19%, surpassing the benchmark (NIFTY 500 – TRI) return of 12.33% and the category average of 12.23%.
The scheme has outperformed its benchmark and category average in terms of returns over the last five years, delivering a return of 22.86% compared to 16.97% and 12.23% respectively. The flexi cap fund has also shown strong performance over the last three years, with a return of 17.63% compared to 13.23% by the benchmark and 12.90% as the category average. Since inception, the scheme has delivered a consistent Compound Annual Growth Rate (CAGR) of 19.24%.
Based on daily rolling returns, the scheme has shown superior performance compared to its peers over the last seven and 10 years, with CAGR of 18% and 18.75% respectively. In the last three and five years, the scheme has also delivered a strong CAGR of 22.36% and 18.74% based on daily rolling returns.
According to annual returns data, the scheme experienced negative returns in only two years, 2018 and 2022, with a decline of approximately 0.43% and 2022, respectively. In contrast to its competitors, the scheme achieved its highest return in 2013, reaching around 11.25%.
Parag Parikh Flexi Cap Fund holdings
The Parag Parikh Flexi Cap Fund has established itself as a highly reliable performer in the market, with its consistent success being credited to the fund’s steadfast investment strategy. The fund has consistently ranked among the highest-performing funds from 2019 to 2023, largely attributed to its substantial investment in foreign equities. Nonetheless, with the fund’s expansion in size and the implementation of RBI limitations on overseas investments, its international market exposure has decreased from 27% in 2021 to its current level of 13%.
The Parag Parikh Flexi Cap Fund has notable holdings, with HDFC Bank having the highest allocation of 8.04%. This is followed by Bajaj Holdings at 7.22%, Power Grid at 6.54%, and Coal India at 5.76%. Additionally, ITC holds 5.47%, ICICI Bank has 4.93%, HCL Technologies at 4.10%, and Maruti Suzuki with a 3.77% share.
Investment and returns
The flexi cap fund as of January 31, 2025, had allocations of 80.56% in equity, 9.96% in debt, and 9.48% in other investments. Comparatively, the scheme is overweight in debt and other investments while being underweight in equity when compared to the flexi cap category. On average, the flexi cap category had allocations of 91.16% in equity, 6.49% in other investments, and 2.35% in debt.
In terms of market capitalsation allocation, the fund had 61.48% in large cap, 2.58% in mid cap, 33.34% in other investments, and 2.60% in small caps.
If an investor had deposited Rs 10,000 through SIP at the start of the fund, the current value would now be Rs 46.64 lakh with an XIRR of 19.22%. Alternatively, investing the same amount in the benchmark would have yielded Rs 5.63 crore with an XIRR of 14.89%.
On the other hand, a lumpsum investment of Rs 1 lakh made in the fund at its inception would now be valued at Rs 7.89 lakh with a CAGR of 19.23%. Investing the same amount in the benchmark would have resulted in a value of Rs 32.81 lakh with a CAGR of 12.27%.
Other top flexi-cap funds
- The JM Flexi-cap Fund-Reg (G) has shown a strong three-year compound annual growth rate (CAGR) of 23.0%, positioning it as the top performer in its category.
- Following closely behind is the HDFC Flexi Cap Fund (G) with a 21.6% CAGR.
- The Motilal Oswal Flexi Cap Fund-Reg (G) has also delivered impressive results, with a 19.2% CAGR.
- The ICICI Pru Flexicap Fund (G) has provided steady returns of 18.1%.
- The Bank of India Flexi Cap Fund-Reg (G) rounds out the top performers with a 17.3% CAGR over three years.
While short-term returns may vary, these funds have displayed resilience and growth potential, making them attractive options for long-term investors.