Flexi-cap Funds Outperform Nifty 500 TR Index Despite Average Investor Losses

Flexi-cap funds have been a popular choice among investors in recent years, offering maximum flexibility to fund managers to allocate their corpus across large-, mid- and small-cap companies. However, despite this flexibility, most investors still lost money in these funds over the past year, despite 33 out of 38 flexi-cap funds beating the Nifty 500 TR index.

Flexi-cap Funds Outperform Nifty 500 TR Index

The Nifty 500 TR index declined 3.71% during the past year, but 33 out of 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.

This is a strong result for active fund managers, but 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.

Only 16% of Investor Money Was Invested in Funds That Made Money

Those 15 funds account for just ₹88,000 crore of the category’s ₹5.43 lakh crore asset base, which means only 16% of investor money was invested in funds that actually made money over the past year.

Market Impact and Details

• Quant Flexi Cap Fund was the standout performer, generating an 11.15% return, nearly 15 percentage points higher than the Nifty 500 TRI’s return of -3.71%.
• The category’s largest schemes, such as Parag Parikh Flexi Cap Fund, HDFC Flexi Cap Fund, and Kotak Flexi Cap Fund, delivered modest negative returns, shaping the average investor experience.
• Only five flexi-cap funds delivered returns below the Nifty 500 TRI’s decline of 3.71%, with Samco Flexi Cap Fund losing 9.18%, trailing the benchmark by more than five percentage points.

Key Takeaways

• 33 out of 38 flexi-cap funds beat the Nifty 500 TR index over the past year.
• Only 15 schemes generated positive returns, accounting for just ₹88,000 crore of the category’s ₹5.43 lakh crore asset base.
• The category’s largest schemes delivered modest negative returns, shaping the average investor experience.

FAQs

What is a flexi-cap fund?

A flexi-cap fund is a type of mutual fund that allows fund managers to allocate their corpus across large-, mid- and small-cap companies without any regulatory limits.

How did flexi-cap funds perform over the past year?

33 out of 38 flexi-cap funds beat the Nifty 500 TR index, but only 15 schemes generated positive returns, accounting for just ₹88,000 crore of the category’s ₹5.43 lakh crore asset base.

What is the significance of the category’s largest schemes?

The category’s largest schemes, such as Parag Parikh Flexi Cap Fund, HDFC Flexi Cap Fund, and Kotak Flexi Cap Fund, delivered modest negative returns, shaping the average investor experience.

Conclusion

While flexi-cap funds outperformed the Nifty 500 TR index over the past year, 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. It is essential to look at other factors, such as fund strategy, portfolio shifts, risk metrics, and performance across multiple market cycles, to gain a better understanding of the fund’s performance.