Summary of this article
Flexi cap funds may fall under one category but differ widely in how they invest.
The mix largely depends on the fund manager’s strategy and market outlook.
Before investing, review the fund’s portfolio allocation to ensure it fits your risk appetite and financial goals.
When an investor invests in a particular category of fund, he or she expects that fund to invest in a certain manner. For instance, if an investor invests in a large-cap fund, she would know that her money is going to be invested in the largest companies of the country.
The same is the case with mid-cap and small-cap funds. However, flexi-cap funds may not provide this visibility. A flexi-cap fund, as defined by the Securities Exchange Board of India (Sebi), is an open-ended equity scheme that has to invest at least 65 per cent of its assets in equities. It enjoys the flexibility to invest across companies of any market capitalisation. That is, large-cap, mid-cap, and small-cap companies. But, if you get into the details, you would know that not all flexi-cap funds are managed the same way.
Flexi-cap funds leave a lot to the fund manager’s discretion. Some might maintain a balanced mix, while others may lean heavily towards one segment – say, large-cap or mid-cap- shows the data.
To understand how stark the difference could be, we, at Outlook Money, looked at some numbers. We looked at the average three-year asset allocation of all flexi cap funds between October 2022 and September 2025. Here we considered only those funds that had been in existence for at least three years. And here’s what we found.
Conservative Flexi Cap Funds
Some big funds like HDFC Flexi Cap Fund, the second largest fund in the flexi-cap space (AUM: Rs 91,041 crore), Canara Robeco Flexi Cap Fund, Kotak Flexi Cap Fund, Franklin India Flexi Cap Fund, and Edelweiss Flexi Cap Fund, held over 70 per cent of their portfolio in large-cap companies. Their mid-cap exposure was limited to around 20 per cent. So, going by the three-year average data, we can say that these flexi-cap funds played it safe and behaved more like a large-cap fund.
Large-cap companies, as defined by the market regulator, Sebi, are the largest 100 companies of the country in terms of their market capitalisation.
Similarly, Sebi defined mid-cap stocks as the companies that rank between 101 and 250 in terms of their market capitalisation arranged in descending order.
Aggressive Flexi Cap Funds
Contrary to the large-cap biased flexi-cap funds that we discussed above, some funds like Samco Flexi Cap, LIC MF Flexi Cap, JM Flexi Cap, Bank of India Flexi Cap, and Tata Flexi Cap Fund had a considerably higher allocation towards mid-cap stocks.
In fact, Samco Flexi Cap, a small fund managing assets worth Rs 363 crore as at October 30, 2025, had an average allocation as high as 62 per cent in mid and small-cap companies.
LIC MF's flexi-cap fund also held over 50 per cent of its portfolio in mid and small caps.
Undoubtedly, according to the portfolio allocation, the performance can vary significantly across funds in this category, depending on the fund manager’s plan and strategy.
What Does It Mean For Investors?
Flexi cap funds may belong to the same category, but they can behave very differently in reality. The difference largely depends on how the fund manager chooses to allocate money across large, mid, and small-cap stocks. Some managers prefer stability and stick closer to large-caps, while others take a more aggressive route and chase higher returns through mid and small-caps.
That’s why, before investing in a flexi-cap fund, apart from just returns, an investor should always check the fund’s portfolio allocation and investment style. This could help you understand if the fund’s approach matches your own risk appetite and financial goals.
