Higher returns and increased preference for diversification drive surge in investor interest in Flexi-cap funds over the last five years: ICRA Analytics
Mumbai, June 23, 2025: Increasing preference for diversification and higher returns seem to be prompting investors to look at flexi-cap funds. The net Assets under Management (AUM) of these funds has grown by over 175 per cent in the last four years at Rs 4.71 lakh crore in May 2025, as against Rs 1.71 lakh crore in May 2021.
Inflows into these funds has increased by nearly 239.79 per cent at Rs 3841.32 crore in May 2025, as compared with Rs 1130.48 crore in May 2021. Flexi-cap funds posted category average returns of 23.40 per cent during the 5-year period, ICRA Analytics said.
“The flexible allocation across large-, mid-, and small-cap stocks allows fund managers to adapt to market conditions, making them attractive during uncertain times. High historical returns are another major driver for investors to select this fund over others. Moreover, unlike multi-cap funds, flexi cap funds can dynamically shift allocations, helping generate alpha and manage risk better,” Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics, said.
Top 10 best-performing flexi cap funds in terms of 3-year return
Source: MFI 360 Explorer; AMFI
| Scheme Name | 1-year | 3-year | 5-year |
| JM Flexicap Fund – Growth | 1.98 | 25.75 | 28.16 |
| HDFC Flexicap Fund – Growth | 14.98 | 24.95 | 31.22 |
|
Motilal Oswal Flexi Cap Fund – Reg – Growth
|
19.34 | 24.60 | 22.97 |
|
Invesco India Flexi Cap Fund – Reg – Growth
|
14.84
|
23.93
|
— |
|
Bank of India Flexi Cap Fund – Reg – Growth
|
1.84
|
23.29 | — |
|
Franklin India Flexi Cap Fund – Growth
|
11.00
|
21.29 |
27.95
|
|
Parag Parikh Flexi Cap Fund – Reg – Growth
|
14.70
|
20.95
|
26.81
|
|
Quant Flexi Cap Fund – Growth
|
-4.28
|
20.76
|
33.54 |
|
HSBC Flexi Cap Fund – Growth
|
10.50
|
20.73 | 25.23 |
|
ICICI Prudential Flexicap Fund – Reg – Growth
|
10.57
|
20.23
|
—- |
* Less than 1-year Absolute returns, Greater than or Equal to 1 year Compound Annualized returns
However, while these funds offer flexibility to investors by allowing fund managers to shift allocations between large, mid, and small caps, it also means that the performance of these funds heavily depends on the manager’s skill and timing. “Investors may not always know the current exposure to different market caps, which can affect risk levels. If the manager misjudges market cycles, returns can suffer despite the fund’s flexibility. One more thing that we should bear in mind is that unlike category-specific funds, flexi caps may not fully be able to capitalize on the growth of any one segment,” Kumar pointed out.
Retail investor’s interest continues to remain strong in equity mutual funds
Retail individual investors continued to show resilience amid rising global volatility, which has been worsened by geopolitical tensions stemming from India’s Operation Sindoor against Pakistan and ongoing worries about global inflation. Individual retail investors’ contribution to the average AUM of growth/equity-oriented schemes stood at 44.96 per cent in May-25 as compared to 44.87 per cent in Apr-25 and 45.80 per cent in May-24, AMFI data suggests.
“The industry AUM has touched Rs 72.19 lakh crore in May 2025 and given the current momentum we are witnessing, particularly from retail investors, we expect the industry to breach the Rs 100 lakh crore mark in the next two-to-three years,” he said.
The total number of outstanding SIP accounts grew 3 per cent on a year-on-year basis to 905.57 lakhs in May 2025 from 875.89 lakhs in the same period of the previous year. SIP contribution over the year grew 28 per cent to Rs. 26,688 crore in May 2025 from Rs. 20,904 crore in the same period of the previous year. SIP AUM grew 27 per cent over the year in May 2025, while over the month it grew by 5 per cent, suggesting a strong interest from retail investors.