3 Best Flexi Cap Funds for SIP

Amid volatile market conditions, flexi cap mutual funds, which are diversified equity schemes, have become a popular choice among investors.

Last year, i.e. 2024, net cumulative inflows into Flexi Cap Funds in 2024 were slightly higher than the other subcategories of mutual funds.

This year as well, flexi cap funds are dominating the inflows - Rs 468 billion (bn) so far in eight months of 2025.

The Assets Under Management (AUM) of the flexi cap funds category has reached nearly Rs 5 trillion (tn), as per the AMFI data. This is the second-highest among the 11 subcategories of equity funds after sector & thematic funds.

Flexi cap funds, as per the regulatory guidelines, are 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.

So, they dynamically invest in largecaps, midcaps, and smallcaps, depending on their outlook.

The fund manager when approaching these market cap segments, considers the market conditions, the fundamentals of the companies, valuations and liquidity among a host of other factors.

Flexi cap funds due to the investment mandate, have displayed their potential to generate alpha, i.e. outperform their benchmark index. This is because, in good times, they usually have a high exposure to growth-oriented stocks.

Also, when the market falls, the drawdown in the case of flexi cap funds is usually less compared to mid cap funds, small cap funds, and multi cap funds.

This is because the fund manager can manoeuvre between market cap segments. In volatile times, these funds hold a largecap biased portfolio for stability.

In this editorial, we walk you through 3 flexi cap funds that have fared well on 3-year and 5-year rolling returns, as well as risk ratios (3-year standard deviation, Sharpe ratio, Sortino ratio, and up/down capture ratio), which you could consider for SIPs.

#1 Parag Parikh Flexi Cap Fund

Launched in May 2013 as Parag Parikh Long Term Value Fund, this scheme was recategorised as Parag Parikh Long Term Equity Fund, and thereafter, when the capital market regulator established 'flexi cap' as a category, it was updated to Parag Parikh Flexi Cap Fund.

This scheme aims to identify fundamentally sound stocks through a bottom-up approach. It prefers stocks trading at attractive valuations. As per the August 2025 portfolio, it's managing an AUM of over Rs 1.15 tn, the highest in its category.

It has benefited from high-quality, long-term stock holdings spread across sectors, market capitalisations, and geographies.

To reduce downside risk and benefit from subsequent market uptrends, the fund focuses on investing in attractively priced stocks.

While following its flexi cap investment mandate, it usually holds a largecap biased portfolio along with a tactical allocation to midcaps and smallcaps.

For geographical diversification, the fund also invests in a few select global giants, such as Meta, Alphabet (Google), Microsoft, Amazon, etc.

So, it holds a fairly diversified portfolio of domestic and overseas equities with emphasis on long-term capital appreciation and reduction of the risk of loss.

As per its August 2025 portfolio, the fund has 76 stocks in its portfolio, of which 61% are largecaps, around 3% are smallcaps, and 2% midcaps.

Currently, around 12% are in overseas equities, and cash & cash equivalents are about 11% of the portfolio.

The top 10 stocks are 48.9% of the portfolio and include names such as HDFC Bank (7.9%), Bajaj Holdings & Investments (5.9%), Power Grid (5.9%), etc.

Among the sectors, the top 3 are banks (29.1%), IT (9.6%), and auto & ancillaries (7.9%).

For defensive considerations, the fund is also holding nearly 11% in money market instruments, mainly certificates of deposits (CDs), commercial papers (CPs), and treasury bills (T-bills).

Moreover, the fund is holding around 1% in REITs & InvITs as well as units of domestic mutual funds.

Like many of its peers, the fund holds its portfolio with conviction and a long-term view. Its portfolio turnover has ranged between 19% to 38% in the last one year.

With this strategy, the fund has rewarded investors well on a risk-adjusted basis. The fund has prioritised risk management while seeking attractive investment opportunities.

In the last 10 years, the fund has delivered an XIRR or SIP return of 20.67% compared to 15.94% by its benchmark, i.e. the Nifty 500 - TRI (as of 24 September 2025).

Parag Parikh Flexi Cap Fund - 10 Year SIP

A monthly SIP of Rs 10,000 in the fund over 10 years, i.e., a total investment of Rs 1.2 million (m), would now be valued at Rs 3.57 m.

#2 HDFC Flexi Cap Fund

Launched in January 1995 as HDFC Equity Fund, in January 2021, this scheme was rechristened as HDFC Flexi Cap Fund to adhere to the market regulator's revised category definition.

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

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

It invests in companies that are likely to achieve above-average growth, enjoying distinct competitive advantages, and having superior financial strength. The fund follows a blend of growth and value styles of investing to generate optimal returns.

It usually holds 45-55 stocks in its portfolio. As per the August 2025 portfolio, there are 50 stocks, of which 75% are largecaps, around 4% midcaps, and 8% smallcaps. Cash & cash equivalents are 8% of the current total assets.

The 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%).

Apart from equities, the fund has 3% exposure to REITs & InvITs, and 0.7% in government securities (G-secs).

Overall, HDFC Flexi Cap Fund holds its portfolio with conviction and a long-term view. Its portfolio turnover has ranged between 20% and 45% in the last one year.

The investment strategy and a robust portfolio have helped it showcase an impressive turnaround in recent years, reclaiming its position among the top performers in the Flexi Cap Fund category.

It has managed its risk well and rewarded investors well on a risk-adjusted basis over the long term.

In the last 10 years, the fund has delivered an XIRR or SIP return of 20.03% compared to 15.94% by its benchmark, i.e. the Nifty 500 - TRI (as of 24 September 2025).

HDFC Flexi Cap Fund - 10 Year SIP

A monthly SIP of Rs 10,000 in the fund over 10 years, i.e., a total investment of Rs 1.2 million (m), would now be valued at Rs 3.45 m.

#3 Franklin India Flexi Cap Fund

This is one of the oldest equity mutual funds in India, launched in September 1994, formerly known as Franklin India Prima Plus Fund.

It later became Franklin India Equity Fund after the mutual fund categorisation and rationalisation norms came into force, and thereafter was rechristened as Franklin India Flexi Cap Fund when the regulator established 'flexi cap' as a category.

With a legacy of more than 30 years, the fund has established itself as a decent performer in the flexi cap funds category, having witnessed various market cycles.

As of August 2025, it has an AUM of over Rs 187 bn, the 7th largest fund in the flexi cap funds category.

It follows a disciplined, research-driven investment strategy and a bottom-up stock picking approach while pursuing a blend of value and growth style of investing.

The fund prefers wealth-creating companies across sectors with a core focus on the fundamentally healthy ones in growth-oriented businesses. It prefers quality businesses with strong balance sheets and run by reliable management.

As regards market cap allocation, it's decided based on the relative opportunities available. However, it prefers to maintain a large-cap-biased portfolio. It avoids chasing market momentum and follows a buy-and-hold approach.

Usually, it holds 45 to 60 stocks in its portfolio. As per its August 2025 portfolio, the fund has 56 stocks, of which 76% are largecaps, around 10% midcaps, and 9% smallcaps. Cash & cash equivalents are about 4% of the fund's assets.

The top 10 stocks are 44.5% of the portfolio and include heavyweights such as HDFC Bank (8.6%), ICICI Bank (8.1%), Bharti Airtel (4.6%), etc.

The portfolio consists of a fair blend of cyclical and defensive sectors. The top 3 sectors are banks (24.5%), IT (8.7%), and healthcare (7.3%).

Moreover, it holds the portfolio with conviction as reflected by the low portfolio turnover of 20-30% in the last one year.

With this, the fund has delivered reasonable returns over the long run and rewarded investors with a decent risk-adjusted basis.

In the last 10 years, the fund has delivered an XIRR or SIP return of 17.41% compared to 15.94% by its benchmark, i.e. the Nifty 500 - TRI (as of 24 September 2025).

Franklin India Flexi Cap Fund - 10 Year SIP

A monthly SIP of Rs 10,000 in the fund over 10 years, i.e., a total investment of Rs 1.2 million (m), would now be valued at Rs 2.99 m.

Conclusion

Note that flexi cap funds have the potential to generate alpha over the long run. However, it's important to have a high-risk appetite and an investment time horizon of at least 5-7 years when considering them.

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

Happy investing.

#Table Note: Returns data as of 24 September 2025. Returns are XIRR in percentage. Monthly SIP of Rs 10,000 over a 10-year and 5-year period in the Direct plan - Growth option considered.
Past performance is not an indicator of future returns. The securities quoted in the table 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.