Investors pump over Rs 30,000 crore in flexi-cap mutual funds in H1 CY2025. Is all-cap exposure a new favourite?
mutual funds
have continued to dominate
investors
' preference by receiving the highest
inflows
among all equity mutual fund categories in the first half of the current calendar year, market experts are of the opinion that these funds are attracting huge inflows due to their versatility to invest across market caps—large, mid, and small.
'In a market where leadership is rotating and volatility is high; investors prefer funds that allow managers to dynamically allocate capital to the most promising segments. This adaptability is appealing in 2025 as mid and small caps have seen sharp movements, and investors are looking for stability with upside potential. Additionally, the category has a broad appeal for both moderate and growth-oriented investors, Sagar Shinde, VP Research at Fisdom shared with ETMutualFunds.
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In the first half of the current calendar year, the
flexi cap funds
have received an inflow of Rs 31,532 crore, according to the last data declared by Association of Mutual Funds in India (AMFI). Since March 2025, these funds have continued to receive the highest inflows among all equity mutual fund categories and in the last six months, flexi cap funds have received the highest inflow in May of Rs 5,733.16 crore, the
AMFI
data said.
According to the Sebi mandate, flexi cap funds should have a minimum investment in equity and equity related instruments of around 65% of total assets and these are open ended dynamic equity schemes investing across large cap, mid cap, small cap stocks.
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Flexi cap mutual funds offer the fund managers the freedom to invest across
market capitalisations
and sectors/themes. It means the fund managers can invest anywhere based on his outlook on the market.
With the fund managers having the flexibility to invest across market capitalisations and sectors/themes, Shinde firmly says that yes, the ability to invest across market caps makes flexi cap funds well-suited for the current environment, where macro trends and earnings visibility vary across sectors and market segments and their dynamic allocation helps navigate volatility and capture upside across the spectrum.
He further adds that while inflows have been strong, it reflects growing investor confidence rather than overcrowding, especially since the universe of opportunities remains wide and the key lies in the fund manager's ability to stay nimble and selective.
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In the first half of the CY2025 (January 1 to June 30), flexi cap funds offered an average return of 1.89% with Tata Flexi Cap Fund and Kotak Flexicap Fund offering 9.20% and 9.01% returns respectively. Samco Flexi Cap Fund lost the most of around 9.69% in H1 CY2025.
Parag Parikh Flexi Cap Fund
offered 5.29% return in the first half of 2025.
ETMutualFunds looked at the performance of flexi cap funds from March to June as well because since March these funds have been continuously topping the inflow chart among all equity categories.
Between March to June, flexi cap funds have offered an average return of 18% with Samco Flexi Cap Fund offering the highest return of around 24.33%. Invesco India Flexi Cap Fund offered 23.04% return. Parag Parikh Flexi Cap Fund gave the lowest return of 11.03% from March to June.
Post looking at the performance of these funds, Shinde recommends investing in flexi cap funds via SIPs as it allows investors to average out entry points during market volatility.
'SIPs help reduce timing risk and build long-term exposure systematically. While valuations in parts of the market may look stretched, delaying investment completely may lead to missed opportunities. For those concerned about near-term consolidation, continuing or starting an
SIP
remains a prudent route,' he added.
In the first half of 2025, Nifty 100 - TRI has gone up by 6.98%, Nifty Midcap 100 - TRI has gone up by 4.25% and Nifty Smallcap 100 - TRI have gone up by 0.83%.
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According to Shinde, the outlook for flexi cap funds remains constructive and given their mandate to shift between market caps, they are well-positioned to benefit from sectoral and cyclical shifts.
'As markets evolve and valuation gaps emerge across segments, skilled fund managers can take advantage of these opportunities. However, performance will depend on the manager's ability to read market signals and rebalance effectively. Over the medium to long term, flexi cap funds should continue to deliver competitive returns, especially for investors seeking diversification and active management,' he added.
Flexi cap schemes are typically recommended to moderate investors to create wealth over a long period of time. Ideally, one should invest in these schemes with an investment horizon of five to seven years.
If you are looking for recommendations, see:
Best flexi cap mutual funds to invest in July 2025
(
Disclaimer
: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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