Flexi-cap funds with highest and lowest large-cap stock allocation: What the data shows

Flexi-cap funds are equity mutual funds that give fund managers the flexibility to invest across large-cap, mid-cap, and small-cap stocks. However, this flexibility does not mean that all flexi-cap funds maintain a similar portfolio mix. Some funds have a strong tilt towards large-cap stocks, while others allocate a relatively higher share to mid- and small-cap companies.

Under Securities and Exchange Board of India (Sebi) rules, flexi-cap funds are required to invest at least 65% of their assets in equity and equity-related instruments. Beyond this minimum requirement, fund managers can decide how to distribute the portfolio across market-cap segments.

This means two flexi-cap funds can have significantly different portfolios despite belonging to the same category. For investors who already hold large-cap funds, the large-cap allocation of a flexi-cap fund can also be relevant when assessing portfolio overlap.

According to Value Research data, the flexi-cap category had an average 58.41% allocation to large-cap stocks.

Flexi-cap funds with the highest large-cap allocation

Among the top 10 flexi-cap funds by AUM considered, Parag Parikh Flexi Cap Fund had the highest allocation to large-cap stocks at 91.14%. This was followed by Franklin India Flexi Cap Fund at 76.87% and HDFC Flexi Cap Fund at 75.69%.

Parag Parikh Flexi Cap Fund stands out, with more than nine-tenths of its portfolio allocated to large-cap stocks. Its large-cap allocation is also substantially above the category average of 58.41%.

Franklin India and HDFC Flexi Cap Fund also had large-cap allocations of more than 75%, indicating a relatively stronger tilt towards established large companies within the flexi-cap category.

Flexi-cap funds with the lowest large-cap allocation

At the other end of the spectrum, Motilal Oswal Flexi Cap Fund had the lowest large-cap allocation among the top 10 funds by AUM considered.

Motilal Oswal Flexi Cap Fund’s large-cap allocation was about 20.6 percentage points below the category average. ABSL Flexi Cap Fund was also below the category average, while UTI and SBI were only slightly above it.

ICICI Prudential Flexicap Fund, with 65.23% in large-cap stocks, was the closest to the middle of this group but still had a higher large-cap allocation than the category average.

What does this mean for investors?

The variation in large-cap allocation highlights an important difference within the flexi-cap category. While these funds have the flexibility to move across market-cap segments, their actual portfolios can remain tilted towards a particular segment.

For investors comparing flexi-cap funds, the large-cap allocation provides one way to understand how a fund is positioned relative to its peers. It can also be relevant when assessing potential overlap with an existing large-cap portfolio.

Disclaimer: This is purely for educational/informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.