33 of 38 Flexi-cap funds beat the Nifty 500, but most investors still lost money

are designed to give fund managers maximum freedom. Unlike large-cap funds, which must invest at least 80% of their corpus in large-cap stocks, flexi cap funds can allocate money across large-, mid- and small-cap companies without any regulatory limits.

That flexibility appears to have helped over the past year.

The Nifty 500 TR index declined 3.71% during the period. In comparison, 33 of the 38 flexi cap funds delivered better returns than the benchmark. The category average return stood at -1.29%, outperforming the Nifty 500 by 2.42 percentage points.

At first glance, that looks like a strong result for active fund managers.

A closer look at where investors’ money is parked tells a different story.

While most funds beat the benchmark, only 15 schemes generated positive returns. More importantly, those 15 funds account for just ₹88,000 crore of the category’s ₹5.43 lakh crore asset base.

In other words, only 16% of investor money was invested in funds that actually made money over the past year.

Only 15 flexi cap funds are in green

Out of 33 funds that beat the benchmark, only 15 delivered positive returns over the past year.

Quant Flexi Cap Fund was the standout performer, generating an 11.15% return. That is nearly 15 percentage points higher than the Nifty 500 TRI’s return of -3.71%.

Flexi Cap Schemes That Delivered Positive Returns

However, these schemes manage about ₹88,000 crore, or just 16% of the category’s ₹5.43 lakh crore asset base. That means the majority of investor money was not invested in funds that generated gains. The category’s largest schemes sit elsewhere in the return rankings.

Most flexi cap money was in funds that lost money

Eighteen flexi cap funds delivered returns between 0% and -3.71%. Investors in these schemes lost money, but less than they would have by tracking the Nifty 500.

This list contains some of the category’s largest and most widely held funds.

Schemes that beat the Nifty 500 but delivered negative returns

Parag Parikh Flexi Cap Fund, the largest scheme in the category with assets of about ₹1.41 lakh crore, returned -1.19%. HDFC Flexi Cap Fund, which manages roughly ₹1 lakh crore, returned -0.14%. Kotak Flexi Cao Fund, with assets exceeding ₹54,000 crore, delivered -1.36%.

Together, these three schemes alone account for close to half of all assets invested in flexi cap funds.

As a result, the average investor experience was shaped less by the category’s best-performing funds and more by these large schemes that delivered modest negative returns.

Only five funds failed to beat the Nifty 500

Only five flexi cap funds delivered returns below the Nifty 500 TRI’s decline of 3.71%.

At one end was NJ Flexi Cap Fund, which underperformed the benchmark by less than half a percentage point. At the other was Samco Flexi Cap Fund, which lost 9.18%, trailing the benchmark by more than five percentage points.

Flexi Cap schemes that underperformed the index

What should investors take away?

The past year produced a clear set of winners and losers among flexi cap funds. Yet history suggests those rankings can change quickly.

Several funds that topped the return charts today were nowhere near the top a few years ago. Similarly, some of the category’s largest and most widely held funds spent the past year in negative territory but continue to have strong long-term track records.

Hence, while analyzing returns, it is important to look at other factors as well. Fund strategy, portfolio shifts, risk metrics and performance across multiple market cycles can help provide better insights into the fund.