3 Best Flexi Cap Funds for 2025 – Top Performing Flexi Cap Mutual Funds in India

Flexi Cap Funds, with their versatile investment mandates, are well-positioned to employ a dynamic investment strategy, investing across various market cap segments based on the market outlook. With no imposed limits or restrictions, this category empowers fund managers to exercise complete discretion in determining the market cap allocation within the portfolio. This flexibility enables them to capitalise on evolving market dynamics, potentially generating higher alpha for investors.

In this article, we will explore the best Flexi Cap Funds for 2025 selected based on 3-year rolling returns. But first, let us know about the category in detail.

What are Flexi Cap Funds?

SEBI has defined Flexi Cap Mutual Funds as equity-oriented mutual funds that invest a minimum of 65% of their assets in equity and equity-oriented instruments of companies across the market cap range without any upper or lower limit.

Depending on market conditions, liquidity conditions, and valuations, the fund manager of a Flexi Cap Fund has the flexibility to manoeuvre among large-cap, mid-cap, and small-cap stocks depending on the market insights. This allows fund managers the scope to identify high potential opportunities from a large universe of stocks, and swiftly adapt to changing market trends, which can reward investors with superior risk-adjusted returns across market phases.

Should investors consider investing in Flexi Cap Funds in 2025?

Market experts are positive on the Indian equity market's bullish trajectory in 2025, supported by robust fundamentals of the corporate sector and the resilient growth of the domestic economy. However, a potential slowdown in global growth, geopolitical tensions, an uncertain inflation outlook, and weak consumption growth can temper the growth prospects.

Diversification across market caps is an efficient strategy that can help minimise the downside risk. Investing in Flexi Cap Mutual Funds is a great way to diversify your portfolio across market caps and thereby maximise portfolio returns over the long run.

Flexi Cap Mutual Funds have the flexibility to increase/decrease exposure to a particular segment depending on market conditions, liquidity conditions, and valuations. As a result, Flexi Cap Mutual Funds can potentially generate stable returns across market phases.

[Read: Flexi Cap Funds: A Sensible Choice That's Attracting Investors]

Going ahead, if the market corrects in 2025, the large-cap allocation in the Flexi Cap Fund portfolio can offer steady growth and a cushion against market volatility. On the contrary, if the market keeps soaring despite the rising valuations, the mid-cap and small-cap exposure can continue to reward investors with substantial gains.

Who should consider investing in Flexi Cap Mutual Funds?

Flexi Cap Funds offer flexibility to the fund manager to allocate assets based on market conditions and opportunities. Accordingly, most Flexi Cap Funds invest a substantial portion across market caps to benefit from the available opportunities and create a diversified portfolio. These funds are suitable for investors looking to benefit from the stability of large caps and at the same time boost portfolio growth with the high growth potential of mid and small caps.

With substantial exposure across market caps, Flexi Cap Funds can be considered by investors with a high risk appetite, an ability to tolerate short-term market fluctuations, and an investment horizon of at least 5 years. It can serve as a 'Core' holding for most investors because of its diversification and adaptability.

Which are the best Flexi Cap Funds for 2025?

Best Flexi Cap Fund for 2025 #1: Quant Flexi Cap Fund

Quant Flexi Cap Fund is a Flexi Cap Fund that follows an active quant-based investment strategy to identify high-growth stocks and dynamically shifts the portfolio mix across large-cap, mid-cap, and small-cap companies. The fund was originally launched as a Thematic Fund in September 2008 but was recategorised as a Flexi Cap Fund in 2022.

Under its current Flexi Cap Fund mandate, Quant Flexi Cap Fund enjoys the flexibility to invest across market caps and diverse sectors. Consequently, the fund's historical long-term performance is not comparable. However, the fund has excelled under its current mandate, emerging as the top-performing scheme in its category.

In the last 3 years, Quant Flexi Cap Fund has recorded growth at a CAGR of 29.2% on a rolling return basis, higher than the growth of 18.7% in the benchmark Nifty 500 - TRI index.

Quant Flexi Cap Fund's top stock holding is dominated by large-cap names such as Reliance Industries, ITC, Samvardhana Motherson International, Bajaj Finance, and Adani Power. Sectorwise, the fund currently has higher exposure in Consumption, Finance, Power, Petroleum, Auto Ancillaries, and Pharma.

Although Quant Flexi Cap Fund frequently churns its portfolio, resulting in an elevated turnover ratio, the highest in its category (currently between 300% to 400%), it has managed to reward investors reasonably for the level of risk taken. Additionally, the fund maintains a diverse portfolio spanning various sectors and industries, but with a large-cap bias, which can help it benefit from the overall economic growth.

Click here to read our detailed analysis of Quant Flexi Cap Fund.

Best Flexi Cap Fund for 2025 #2: JM Flexicap Fund

Launched in September 2008, JM Flexi Cap Fund is a lesser-known Flexi Cap Fund that has turned out to be a category outperformer by delivering robust gains in recent years and rewarding its investors with higher risk-adjusted returns. Its momentum-driven strategy and substantial exposure to lower market cap has enabled it to generate high alpha over the years.

With extraordinary performance recorded in recent years, JM Flexi Cap Fund's returns across time frames look encouraging. The fund has delivered satisfactory performance across various bull and bear market phases in the past and maintains a robust long-term performance record. Moreover, it has rewarded investors with impressive risk-adjusted returns.

In the last 3 years, JM Flexi Cap Fund has recorded growth at a CAGR of 29.1% on a rolling return basis, higher than the growth of 18.7% in the benchmark BSE 500 - TRI index.

JM Flexi Cap Fund's top holdings are spread across market caps and include higher exposure in large caps such HDFC Bank, ICICI Bank, SBI, Infosys, and L&T. Its portfolio is skewed towards Banking stocks, followed by Pharma, Infotech, Auto & Auto Ancillaries, Chemicals, and Consumption.

JM Flexi Cap Fund holds an actively managed portfolio spread across market caps with well-balanced exposure in each segment and shifts the allocation dynamically based on market conditions. With flexible portfolio strategies complemented by risk mitigation techniques, the fund has the potential to perform well in the long run.

Click here to read our detailed analysis of JM Flexi Cap Fund.

Best Flexi Cap Fund for 2025 #3: HDFC Flexi Cap Fund

Launched in January 1995, HDFC Flexi Cap Fund, formerly known as HDFC Equity Fund, stands as one of the oldest schemes in the Flexi Cap Fund category. Notably, the fund always followed a dynamic investment strategy to invest across market caps depending on the available opportunities, but with a bias towards large caps.

HDFC Flexi Cap Fund has demonstrated a remarkable turnaround performance over the past few years, reclaiming its position among the top performers in the Flexi Cap Fund category. Although it may not excel in bear markets, the fund's return profile outshines during bull market phases, offering investors reasonable rewards over complete market cycles.

On a rolling return basis in the last 3 years, HDFC Flexi Cap Fund has recorded growth at a CAGR of 26.7%, higher than the growth of 18.7% in the benchmark Nifty 500 - TRI index.

Its top holdings predominantly comprise large-cap names such as ICICI Bank, HDFC Bank, Axis Bank, Cipla, and Kotak Mahindra Bank. Its portfolio has a notable inclination towards Banking & Finance that forms nearly 40% of its assets along with substantial exposure to Pharma, Auto & Auto Ancillaries, and Infotech.

Due to its high-conviction approach, HDFC Flexi Cap Fund might experience periods of underperformance in the short to medium term, particularly when its high-conviction bets are out of favour, or during momentum-driven market upswings. However, the focus on creating a well-diversified portfolio of fundamentally sound stocks positions it to potentially recover with superior gains. Notably, the fund has established a dependable track record of delivering reasonable risk-adjusted returns over the long term.

Click here to read the detailed analysis of HDFC Flexi Cap Fund.

Conclusion

Flexi Cap funds remain an attractive option for investors seeking growth through equities while maintaining flexibility across market caps and sectors. However, one should carefully select the schemes within the category, ideally preferring schemes with consistent long-term performance track records. Besides, opting for the SIP mode to invest in the category can help minimise the impact of market volatility and significantly compound wealth over a period.

Note: This write up is for information purpose 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, Membership of BASL and certification from NISM no way guarantee performance of the intermediary or provide any assurance of returns to investors.

The securities quoted are for illustration only and are not recommendatory.

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DIVYA GROVER is the co-editor for FundSelect, the flagship research service of PersonalFN. She is also the co-editor of DebtSelect. Divya is an avid reader which helps her in analysing industry trends and producing insightful articles for PersonalFN’s popular newsletter – Daily Wealth letter, read by over 1.5 lakh subscribers.
Divya joined PersonalFN in 2019 and has since then used stringent quantitative and qualitative parameters to analyse funds to provide honest and unbiased research to investors. She endeavours to enable investors to make an informed investment decision and thereby safeguard their wealth.

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.