HDFC Flexi Cap Fund: Among the Top Quartile Performers in its category

HDFC Mutual Fund is among the top 5 fund houses in the country, with assets under management (AUM) of over Rs 8.73 trillion (tn).

It's a fund house following robust investment processes and systems that aims to invest in quality stocks. It practises both value and growth styles of investing and follows a 'buy-and-hold' approach to investing.

This has helped many of the equity mutual fund schemes from HDFC Mutual Fund reward their investors well. One such scheme is the HDFC Flexi Cap Fund.

In this editorial, we will take you through the characteristics of this fund and how it has fared.

Fund Overview

Launched in January 1995 as HDFC Equity Fund, it's among the oldest schemes in the Indian mutual fund industry.

Earlier, it followed a multi cap approach, but pursuant to the mutual fund categorisation and rationalisation norms, it was renamed and rechristened as HDFC Flexi Cap Fund with effect from 29 January 2021.

With an appealing performance track record, the fund's AUM has increased over the years, and today it's over Rs 910 billion (bn) - the highest in its category. This speaks volumes about the popularity of the scheme.

The fund has a versatile investment mandate. It invests 65-100% of its assets in equities across the market cap range - largecaps, midcaps, smallcaps - dynamically or flexibly without any upper or lower limits.

This gives the fund manager the flexibility to manoeuvre the portfolio without restrictions, taking a view of the market and assessing the value and growth opportunities.

When investing in equities, the fund also indulges in derivatives up to 50% of its total assets for hedging purposes.

For defensive considerations, it invests up to 35% of its total assets in debt securities and money market instruments and fixed income derivatives.

It also has the mandate to invest 10% each in units of REITs & InvITs and non-convertible preference shares, and up to 20% in units of mutual funds.

The investment objective of the scheme is to generate capital appreciation/income from a portfolio, predominantly invested in equity & equity-related instruments.

The fund is managed by Roshi Jain, who is a Senior Fund Manager - Equity investments at HDFC Mutual Fund since July 2022. Before that, star fund manager Prashant Jain managed the fund for two decades.

HDFC Flexi Cap Fund - Snapshot

Source: ACE MF

What is the Investment Strategy of HDFC Flexi Cap Fund?

To achieve the investment objective, the fund predominantly invests in companies spanning the entire market capitalisation that are:

• Likely to achieve above-average growth
• Enjoy distinct competitive advantages
• Have superior financial strength

The aim of the equity strategy is to build a portfolio, representing a cross-section of companies diversified across major industries, economic sectors, and market capitalisations that offer an acceptable risk-reward balance.

As a part of the fund management process, the fund also uses derivative instruments such as futures and options, or any other derivative instruments.

A part of the fund's portfolio is also invested in debt and money market instruments (as per the asset allocation limits mentioned earlier). These investments are guided by credit quality, liquidity, interest rates, and their outlook.

Other than that, for diversification purposes, it also invests in units of REITs and InvITs.

What is the Portfolio of HDFC Flexi Cap Fund?

The fund usually holds a portfolio of around 50-55 stocks, making it fairly diversified.

As per the October 2025 portfolio, the fund has 50 stocks, of which 74% are largecaps, 9% smallcaps, and 3% midcaps.

The top 10 stocks comprise 50.5% of the portfolio, and include names such as ICICI Bank (9%), HDFC Bank (8.6%), Axis Bank (7.3%), etc.

Among various sectors, the top 3 are banks (35.2%), auto & ancillaries (13.9%), and healthcare (8.3%), comprising 57.3% of the portfolio.

Currently, the fund is holding 9.7% of its assets in cash & cash equivalents, 2.6% in REITs & InvITs, and 0.6% in government securities.

The fund overall holds its portfolio with conviction with a long-term view, as revealed by the low portfolio turnover ratio, which has ranged between 17-43% in the last one year.

What Are the Historical Returns of HDFC Flexi Cap Fund?

The approach followed by the fund has placed it among the top performers in the flexi cap category and outperform the benchmark, the Nifty 500 - TRI. Since its inception, the fund has clocked 17.2% CAGR (under the Direct Plan).

The fund witnessed underperformance between 2019-20, but from 2021 has shown remarkable performance.

Its 3-year, 5-year, and 7-year, compounded annualised rolling returns have been impressive 24.2%, 28.3%, and 18.3%, respectively, noticeably higher than the category average and the Nifty 500 - TRI (as of 1 December 2025).

It's been among the top quartile performers in the category across short and long periods.

HDFC Flexi Cap Fund - Performance

Source: ACE MF

What About the Risk Profile of HDFC Flexi Cap Fund?

On the risk-o-meter, the fund is classified as very high risk.

That said, the risk the fund has exposed its investors to is low (standard deviation of 10.52) compared to its category average and benchmark (as of 1 December 2025). In fact, the volatility registered by the fund is among the lowest in its category.

On a risk-adjusted basis as well, as reflected by the sharpe and sortino ratios of 0.43 and 0.99, respectively, the fund has outperformed the category average and the Nifty 500 - TRI.

In fact, on the sortino ratio - which captures the downside risk while speaking about risk-adjusted returns - the fund has fared remarkably better.

Should You Add HDFC Flexi Cap Fund to Your Watchlist?

By focusing on quality and a prudent high-conviction strategy, the fund has been able to deliver a consistent performance track record without taking unduly high risk.

It has reclaimed its position among the top performers in the flexi cap fund category. The fund has fared well under its current fund manager, Roshi Jain. Following its mandate, it has actively shifted between market capitalisation, sighting the opportunities and valuation threats.

But given that the fund follows a high-conviction approach, it could lag if the underlying stocks/sectors are out of favour, or if the market momentum wanes.

Consider your risk profile, investment objective and time horizon before investing. Don't just base your investment decision on past returns, which may or may not be repeated in the future.

Approach mutual funds sensibly. Be a thoughtful investor.

Happy investing.

#Table Note: Data as of 1 December 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.