JM Flexicap Fund v/s HDFC Flexi Cap Fund: Which is Better for Your Watchlist?

In August 2025, the inflows into equity mutual funds shrank 22% compared to the previous month.

But one subcategory received its highest net inflows, of nearly Rs 77 billion (bn): flexi cap funds.

Flexi cap funds have become a popular category ever since the capital market regulator formally introduced them in November 2020.

As per the guidelines, they're mandated to invest a minimum of 65% of assets in equity and equity-oriented instruments of companies across the market cap range without any upper or lower limit.

This versatile investment mandate enables the fund manager of a flexi cap fund to dynamically invest across market cap segments - largecaps, midcaps, smallcaps - depending on their outlook.

When investing, the fund manager manoeuvres between the market cap segments considering market conditions, liquidity, and valuations.

Thus, unlike market cap funds, flexi cap funds have the scope to identify high-potential opportunities from a larger universe of stocks and swiftly adapt to changing market trends.

This can reward investors with superior risk-adjusted returns across market phases. In volatile times particularly, a flexi cap fund can be an apt choice.

In this editorial, we will compare two flexi-cap funds: JM Flexicap Fund and HDFC Flexi Cap Fund.

These schemes are among the popular ones with a large assets under management (AUM).

Read on...

JM Flexicap Fund v/s HDFC Flexi Cap Fund

JM Flexi Fund is an open-ended equity mutual fund scheme launched in September 2008.

The fund was originally categorised as a multicap fund, under which it maintained a large-cap biased portfolio. It was migrated to the newly formed Flexicap fund category in 2020.

As per its August 2025 portfolio, it is managing assets of over Rs 59 bn.

HDFC Flexi Fund, on the other hand, was launched in January 1995 as HDFC Equity Fund. In January 2021, it transitioned into the HDFC Flexi Cap Fund to adhere to the market regulator's revised category definition.

However, that did not have any impact on the underlying investment philosophy of the scheme.

Today, as per the August 2025 portfolio, it is managing an AUM of over Rs 819 bn, the second-highest in its category.

Both these schemes follow distinctive investment approaches or strategies for stock picking...

Investment Strategies

JM Flexicap Fund follows a momentum-based strategy, which involves picking stocks that are on a rising trend and shunning stocks that are lagging.

A dynamic investment approach is adapted in line with market conditions. This active, flexible approach to portfolio management with diversification across market caps and sectors facilitates alpha generation over the years.

To pick stocks, the fund follows the in-house GeeQ model, which focuses on the growth of earnings as well as the quality of earnings.

The fund's primary focus is on stocks across sectors having high growth potential along with high earnings quality as determined by EPS growth, PEG, RoE, ROIC, cash flows, and debt-to-equity ratio, among others.

It also evaluates companies based on management capabilities, governance standards, and competitive advantage.

The fund aims to build a diversified portfolio with low concentration along with low beta. Higher allocation to select conviction stocks/themes could generate superior risk-adjusted returns.

The fund usually holds 40-60 stocks in its portfolio. As of August 2025, the JM Flexicap Fund has 62 stocks in its portfolio. Currently, 45% is in largecaps, 27% in midcaps, and 23% in smallcaps. The fund does not take aggressive cash calls.

This active, flexible approach to portfolio management with diversification across market caps and sectors has facilitated alpha generation over the years.

HDFC Flexi Cap Fund, in line with its investment mandate, aims to create a diversified portfolio spread across major industries, economic sectors, and market capitalisation to offer a reasonable risk-reward balance.

The fund follows a blend of growth and value styles of investing to generate optimal returns.

It invests in companies that are...

• Likely to achieve above-average growth
• Enjoying distinct competitive advantages
• Having superior financial strength

Further, it holds its portfolio with conviction and a long-term view.

HDFC Flexi Cap Fund usually holds 45-55 stocks in its portfolio. As per the August 2025 portfolio, the fund has 50 stocks in its portfolio, wherein 75% are largecaps, around 4% midcaps, and 8% smallcaps. Cash & cash equivalents are 8% of the current total assets. Plus, it has 3% exposure to REITs & InvITs, and 0.7% in government securities (G-secs).

This strategy has helped the fund in an impressive turnaround in recent years, reclaiming its position among the top performers in the Flexi Cap Fund category.

Here are the top 10 holdings of two schemes as of 31 August 2025.

Top Portfolio Holdings

In the case of JM Flexicap Fund, the top 10 stocks comprise 34.6% of the portfolio and include names such as ICICI Bank (5.2%), Godfrey Phillips India (4.8%), L&T (3.9%), etc.

Among the various sectors, the top 3 are banks (15.1%), IT (11.6%), and FMCG (11.2%).

Given the investment strategy followed by JM Flexicap Fund, it churns its portfolio often. Its portfolio turnover ratio has ranged from 110-180% in the last one year, which is higher than many of its peers.

As regards the HDFC Flexi Cap Fund, its top 10 stocks comprise 51.5% of the portfolio and include heavyweights ICICI Bank (9.2%), HDFC Bank (8.3%), Axis Bank (6.9%), etc.

The top 3 sectors of the fund are banks (34.3%), auto & ancillaries (15.8%), and healthcare (9.1%).

Given the fund's high conviction and long-term view, HDFC Flexi Cap Fund rarely churns its portfolio. The portfolio in the last one year has ranged between 20% and 45%.

Performance of JM Flexicap Fund and HDFC Flexi Cap Fund

Both these funds have displayed an appealing performance track record over the long-term and outdone many of their peers and the benchmark, i.e. the Nifty 500 - TRI.

As of 17 September 2025, the compounding annualised rolling returns over the last 5 years of JM Flexicap Fund are 21.8% and 20.9% for HDFC Flexi Cap Fund.

To clock these returns, JM Flexicap Fund has exposed its investors to slightly higher risk (as denoted by the standard deviation of 14.8) than HDFC Flexi Cap Fund, as well as the category average and the Nifty 500 - TRI.

That said, both these flexi cap funds have rewarded investors well on a risk-adjusted basis. But HDFC Flexi Cap Fund has outdone JM Flexicap Fund as reflected by the sharpe and sortino ratios.

Fund Report Card Vis-a-Vis Its Category Peers and Benchmark Index

Source: ACE MF

By following their strategy, possessing robust portfolio characteristics, and managing their risk-reward well, both these schemes hold the ability to generate favourable returns for their investors in the long term.

However, HDFC Flexi Cap Fund, due to its high conviction-driven approach and current largecap biased portfolio, might see periods of underperformance, particularly when market momentum favours midcaps and smallcaps.

On point-to-point returns, Rs 10,000 invested five years ago in JM Flexicap Fund would have yielded Rs 33,549, whereas in HDFC Flexi Fund, Rs 36,208 as of 17 September 2025.

JM Flexicap Fund is co-managed by Satish Ramanathan (CIO - Equity) since August 2021, along with Asit Bhandarkar (Senior Fund Manager - Equity), Deepak Gupta (Head of Research & Senior Fund Manager - Equity), and Ruchi Fozdar (who manages the debt investments).

HDFC Flexi Cap has been managed by Roshi Jain since July 2022, who is the Senior Fund Manager - Equity investments at HDFC Mutual Fund.

Conclusion

Both these flexi cap funds are from fund houses following a robust investment process & systems but pursuing unique investment strategies.

Whichever flexi cap fund you choose, make sure you have a high-risk appetite and an investment horizon of at least 5-7 years.

If you choose the fund sensibly, potentially you would be able to make market-beating returns.

Opting for the SIP mode to invest in the category may help minimise the impact of market volatility and significantly compound wealth over a period.

Be thoughtful in your approach.

Happy investing.

#Table Note: Data as of 16 September 2025
Rolling period returns are calculated using the Direct Plan-Growth option. Returns over 1 year are compounded annualised.
Standard Deviation indicates total risk, while the Sharpe Ratio and Sortino Ratio measure the Risk-Adjusted Return. They are calculated over 3 years, assuming a risk-free rate of 6% p.a.
*All flexi cap mutual fund schemes are considered to compute the category average returns.
Please note that this table represents past performance. Past performance is not an indicator of future returns.
The securities quoted are for illustration only and are not recommendatory.
Speak to your investment advisor for further assistance before investing.
Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully.

Disclaimer: This write-up is for information purposes and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme-related documents carefully. Registration granted by SEBI, enlistment as IA with Exchange and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.