Highest Return Mutual Funds in the Last 10 Years – Flexi Cap Fund Category

September 24, 2024 Mutual Fund

In the last couple of years, the Indian stock market has demonstrated remarkable growth, exhibiting resilience and strength. This upward momentum has been largely driven by the outstanding performance of mid and small-cap stocks, which have seen significant gains. At the same time, large-cap indices have also made considerable progress, significantly contributing to the overall market rally. This illustrates that there are opportunities across all market cap segments in the Indian stock market.

In the current calendar year, the broader Nifty 500 index has risen around 23% (as of September 20, 2024); it had gained 25.8% in the previous calendar year. The index is now trading at its all-time high level.

With markets at an all-time high, it is essential to exercise caution. Maintaining a well-balanced exposure across various market capitalisations remains a prudent strategy during such times.

Flexi Cap Funds, with their versatile investment mandates, are well-positioned to employ a dynamic investment strategy. These funds invest across various market cap segments based on the fund manager’s insights. 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.

[Read: Flexi Cap Funds v/s Multi Cap Funds: Which Is Better at a Market High?]

In this article, explore the highest return mutual funds in the last 10 years from the Flexi Cap Fund category, selected based on SIP returns.

Highest Return Flexi Cap Fund in the Last 10 Years #1: Quant Flexi Cap Fund

Quant Flexi Cap Fund was originally launched as a thematic fund in September 2008. After its recategorisation in 2018, the fund now follows an active investment strategy to identify high-growth stocks and dynamically shifts the portfolio mix across large-cap, mid-cap, and small-cap companies. The fund has demonstrated remarkable growth over the past few years, consistently outperforming its benchmark as well as the peers, and delivering substantial alpha for its investors. Quant Flexi Cap Fund has demonstrated a notable preference for momentum-driven stocks, which sets it apart from its peers. This strategy often involves holding many of its stocks with a short-term view, resulting in a high portfolio turnover rate, which has ranged between 300-400% over the past year.

Performance of Quant Flexi Cap Fund

Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory
Data as of September 18, 2024
Returns are XIRR in percentage. Monthly SIP of Rs 10,000 over a 10-year period in Direct plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN) 

In the last 10 years, Quant Flexi Cap Fund grew at an XIRR of 26.5% compared to a growth of 18.3% in its benchmark Nifty 500 – TRI. A monthly SIP of Rs 10,000 over a 10-year period (i.e. total investment of Rs 12,00,000) in the fund would now be valued at Rs 48,97,294.

Top holdings of Quant Flexi Cap Fund

Portfolio data as of August 31, 2024
(Source: ACE MF, data collated by PersonalFN) 

The fund typically maintains a concentrated portfolio of around 25-40 stocks, allowing it to capitalise on high-growth opportunities and market trends effectively. As of August 31, 2024, the fund held 28 stocks in its portfolio with the top 10 stocks accounting for approximately 48% of its assets. Quant Flexi Cap Fund’s top stock holding comprises mainly large-cap stocks, along with a few mid-cap and small-cap stocks and includes names such as Reliance Industries, ITC, Samvardhana Motherson International, Adani Power, LIC of India, Aurobindo Pharma, and Swan Energy.

Highest Return Flexi Cap Fund in the Last 10 Years #2: JM Flexi Cap 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. The fund was earlier known as JM Multi Cap Fund and it usually maintained a large-cap dominated portfolio. However, after SEBI introduced the Flexi Cap Fund category in 2020, the fund underwent recategorisation. It now follows an agile strategy to identify opportunities across market caps, which has helped it generate high alpha over the years. JM Flexi Cap Fund’s portfolio witnesses frequent changes; its turnover ratio in the last one year is around 100-150%. However, it maintains high conviction in certain stocks/sectors to generate superior risk-adjusted returns.

Performance of JM Flexi Cap Fund

Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory
Data as of September 18, 2024
Returns are XIRR in percentage. Monthly SIP of Rs 10,000 over a 10-year period in Direct plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN) 

In the last 10 years, JM Flexi Cap Fund grew at an XIRR of 23.7% compared to a growth of 18.4% in its benchmark BSE 500 – TRI. A monthly SIP of Rs 10,000 over a 10-year period (i.e. total investment of Rs 12,00,000) in the fund would now be valued at Rs 42,10,617.

Top holdings of JM Flexi Cap Fund

Portfolio data as of August 31, 2024
(Source: ACE MF, data collated by PersonalFN) 

With substantial increase in its corpus in the last couple of years, JM Flexi Cap Fund now holds a fairly large portfolio of 60-65 stocks, compared to 35-45 stocks earlier. As of August 31, 2024, the fund held 66 stocks in its portfolio with the top 10 stocks accounting for about 27.5% of its assets. Its top holdings comprise mainly large-cap stocks such as REC, L&T, Dr Reddy’s Laboratories, Infosys, and HDFC Bank, with a few small-cap names such as CESC and KEC International. Notably, the fund has restricted allocation in each stock to under 5%.

Highest Return Flexi Cap Fund in the Last 10 Years #3: Parag Parikh Flexi Cap Fund 

Incepted in May 2013, Parag Parikh Flexi Cap Fund is currently the largest scheme in the Flexi Cap Fund category known for its value-centric and meticulous investment approach. The fund follows a buy-and-hold investment strategy to realise the full potential of each of its portfolio holdings. By focusing on value stocks with a significant margin of safety, Parag Parikh Flexi Cap Fund effectively manages to keep the overall volatility low. This disciplined approach, combined with its ability to pick quality stocks, has enabled Parag Parikh Flexi Cap Fund to deliver superior risk-adjusted returns for its investors. Notably, the fund also offers geographical diversification to its investors by holding a substantial portion of its portfolio in select global giants.

Performance of Parag Parikh Flexi Cap Fund

Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory
Data as of September 18, 2024
Returns are XIRR in percentage. Monthly SIP of Rs 10,000 over a 10-year period in Direct plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN) 

In the last 10 years, Parag Parikh Flexi Cap Fund grew at an XIRR of 22% compared to a growth of 18.3% in its benchmark Nifty 500 – TRI. A monthly SIP of Rs 10,000 over a 10-year period (i.e. total investment of Rs 12,00,000) in the fund would now be valued at Rs 38,33,159.

Top holdings of Parag Parikh Flexi Cap Fund

Portfolio data as of August 31, 2024
(Source: ACE MF, data collated by PersonalFN) 

Among domestic equities, Parag Parikh Flexi Cap Fund held top exposure in popular large-cap names such as HDFC Bank, Power Grid Corporation of India, Bajaj Holdings & Investments, ITC, Coal India, ICICI Bank, and Maruti Suzuki India among others. The top 10 stocks accounted for around 53.6% of its assets with many of these stocks being part of the fund’s core portfolio for multiple years now.

In terms of exposure to offshore companies, Facebook is currently the fund’s largest exposure (with allocation of about 3.3% of its corpus), closely followed by Alphabet Inc., Microsoft Corp, and Amazon.com.

Highest Return Flexi Cap Fund in the Last 10 Years #4: 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. HDFC Flexi Cap Fund boasts an impressive long-term performance history, although it has experienced extended periods of underperformance. After witnessing muted growth between 2019 and 2020, HDFC Flexi Cap Fund has registered extraordinary performance in recent years, which has significantly improved its long-term returns. The fund now stands among the top quartile performers in the category across different time frames and has also generated noticeable alpha over the benchmark. HDFC Flexi Cap Fund follows a blend of growth and value styles of investing to generate optimal returns and avoids investing in momentum-driven bets, even if it results in short-term underperformance.

Performance of HDFC Flexi Cap Fund

Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory
Data as of September 18, 2024
Returns are XIRR in percentage. Monthly SIP of Rs 10,000 over a 10-year period in Direct plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN) 

In the last 10 years, HDFC Flexi Cap Fund grew at an XIRR of 21% compared to a growth of 18.3% in its benchmark Nifty 500 – TRI. A monthly SIP of Rs 10,000 over a 10-year period (i.e. total investment of Rs 12,00,000) in the fund would now be valued at Rs 36,31,085.

Top holdings of HDFC Flexi Cap Fund

Portfolio data as of August 31, 2024
(Source: ACE MF, data collated by PersonalFN) 

HFCF usually holds around 40-45 stocks spread across market caps and sectors, but with a large-cap bias. As of August 31, 2024, the fund held a compact portfolio of 45 stocks with the top 10 stocks accounting for about 56.2% of its assets. Popular large-cap names such as ICICI Bank, HDFC Bank, Axis Bank, Cipla, and HCL Technologies currently form part of its top holdings. The fund has limited the exposure to individual stocks in the mid-cap and small-cap segments to under 2% to reduce the liquidity risk associated with small-sized companies.

Highest Return Flexi Cap Fund in the Last 10 Years #5: Franklin India Flexi Cap Fund

Incepted way back in September 1994, Franklin India Flexi Cap Fund has a history of about three decades to its credit during which it has been through various phases of outperformance and underperformance. After figuring in the list of underperformers for multiple years, the fund has registered remarkable growth in recent years, showcasing substantial growth compared to its benchmark and the category average. The recent outperformance has helped the fund improve its long-term returns. Franklin India Flexi Cap Fund follows a blend of growth and value style of investing to pick stocks across the large-cap, mid-cap, and small-cap domain. It places a strong emphasis on effective risk management, which helps it sail through volatile market conditions and downtrends.

Performance of Franklin India Flexi Cap Fund

Past performance is not an indicator of future returns. The securities quoted are for illustration only and are not recommendatory
Data as of September 18, 2024
Returns are XIRR in percentage. Monthly SIP of Rs 10,000 over a 10-year period in Direct plan – Growth option considered
(Source: ACE MF, data collated by PersonalFN) 

In the last 10 years, Franklin India Flexi Cap Fund grew at an XIRR of 19.9% compared to a growth of 18.3% in its benchmark Nifty 500 – TRI. A monthly SIP of Rs 10,000 over a 10-year period (i.e. total investment of Rs 12,00,000) in the fund would now be valued at Rs 34,27,923.

Top holdings of Franklin India Flexi Cap Fund

Portfolio data as of August 31, 2024
(Source: ACE MF, data collated by PersonalFN) 

Franklin India Flexi Cap Fund holds around 45-55 stocks in its portfolio. As of August 31, 2024, the fund invested in 54 stocks with the top 10 stocks accounting for 45.6% of its assets. It held major exposure to large-cap index heavyweights such as ICICI Bank, HDFC Bank, Infosys, Bharti Airtel, and L&T, among others. It also takes tactical exposure in mid and small-cap stocks, limiting exposure in individual stocks in the segment to 2% or less. It holds most of its stocks with a long-term view to derive the full potential of each holding.

Final thoughts…

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.

The flexible investment mandate of Flexi Cap Funds allows fund managers the scope to generate alpha, thereby rewarding investors with superior risk-adjusted returns.

Besides, compared to Small Cap Funds and Mid Cap Funds, which are very high risk-high return propositions, Flexi Cap Funds offer an acceptable risk-reward balance, potentially mitigating the downside risk better.

However, given that there is no restriction when taking exposure to large-caps, mid-cap and small-cap, Flexi Cap Funds are riskier than pure Large Cap Funds.

Having said that, historical data reveals that a majority of Flexi Cap Funds have predominantly maintained a large-cap biased portfolio at most times. Thus, they can offer better stability during times of market turmoil compared to Multi Cap Funds that invest at least 50% of their assets in stocks of mid and small-sized companies.

Investors should have an investment horizon of at least 5-7 years when investing in Flexi Cap Funds. They can ideally prefer the SIP mode to invest regularly and benefit from the power of compounding of wealth over a period.

Watch this video to find out the mutual fund investment strategy to follow now with markets at an all-time high:

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.

This article first appeared on PersonalFN here