Top 5 Flexi Cap Funds with Highest 1-Year Returns: An In-Depth Analysis

Flexi cap funds are a popular investment choice due to their ability to invest across different market capitalisations, offering a diversified exposure to large, mid, and small-cap stocks. This flexibility allows fund managers to adapt to market conditions and optimise returns. In this article, we will analyse the top five flexi cap funds with the highest 1-year returns, examining their characteristics, performance metrics, and investment strategies.

Bank of India Flexi Cap Fund

The Bank of India Flexi Cap Fund leads the pack with an impressive 1-year return of 65.01%. Launched on 29th June 2020, this fund manages an Asset Under Management (AUM) of Rs 991.80 crore and has an expense ratio of 2.25%. The fund’s portfolio is well-diversified, with 48.02% allocated to large-cap stocks, 24.85% to mid-cap stocks, and 26.53% to small-cap stocks. The fund demonstrates strong risk-adjusted returns, with a Sharpe ratio of 2.79 and a Sortino ratio of 3.76. The standard deviation is 18.09, indicating moderate volatility.

JM Flexicap Fund

The JM Flexicap Fund boasts a 1-year return of 63.71%. Established on 23rd September 2008, the fund has an AUM of Rs 2,472.10 crore and an expense ratio of 1.93%. This fund has a diversified allocation, with 38.41% in large-cap stocks, 22.05% in mid-cap stocks, and 36.2% in small-cap stocks. The fund’s performance is reflected in its Sharpe ratio of 3.04 and Sortino ratio of 4.23, alongside a standard deviation of 16.34, suggesting relatively lower volatility compared to its peers.

Invesco India Focused Fund

Invesco India Focused Fund, launched on 29th September 2020, has achieved a 1-year return of 61.58%. With an AUM of Rs 2,565.50 crore and an expense ratio of 1.94%, the fund has a significant allocation to large-cap stocks at 61.33%, with mid-cap and small-cap stocks making up 18.03% and 12.17% of the portfolio, respectively. The fund boasts a high Sharpe ratio of 3.41 and a Sortino ratio of 5.13, indicating strong risk-adjusted returns. Its standard deviation stands at 13.94, suggesting lower volatility.

Quant Flexi Cap Fund

Quant Flexi Cap Fund(G) has recorded a 1-year return of 61.35%. This fund, which commenced on 23rd September 2008, manages an AUM of Rs 6,272.20 crore with an expense ratio of 1.79%. The fund’s portfolio is primarily invested in large-cap stocks (52.23%), followed by mid-cap (13.38%) and small-cap stocks (11.88%). The fund’s Sharpe ratio is 2.79 and Sortino ratio is 4.13, with a standard deviation of 17.28, indicating a balanced risk-return profile.

Motilal Oswal Flexi Cap Fund

Motilal Oswal Flexi Cap Fund offers a 1-year return of 52.65%. Launched on 28th April 2014, it has the largest AUM among the top five at Rs 10,034.60 crore and a lowest expense ratio of 1.76%. The fund allocates 39.95% to large-cap stocks, 43.87% to mid-cap stocks, and 9.13% to small-cap stocks. The fund’s performance is supported by a Sharpe ratio of 2.73 and a Sortino ratio of 4.38, with a standard deviation of 15.48, reflecting lower volatility.

Understanding the Metrics

The Sharpe Ratio is a popular way to measure how well a fund’s returns compensate for the risk taken. It is calculated by taking the fund’s return, subtracting a risk-free return (like government bonds), and then dividing by the fund’s return volatility (standard deviation). This ratio helps investors understand how much return they are getting for the level of risk they are taking. However, it treats all volatility the same, whether it’s good (upside) or bad (downside), which can be a drawback.

The Sortino Ratio improves on this by focusing only on downside risk, ignoring positive volatility. It uses the standard deviation of returns that fall below a certain target (minimum acceptable return). This makes the Sortino Ratio particularly useful when returns are not evenly distributed, as it doesn’t penalise a fund for having high positive returns. Despite this advantage, the Sharpe Ratio is still more commonly used because it’s simpler and easier to compare across different investments.

Conclusion

The top five flexi cap funds have demonstrated remarkable 1-year returns, driven by their strategic allocation across large, mid, and small-cap stocks. The Bank of India Flexi Cap Fund leads with the highest return, supported by its well-diversified portfolio. JM Flexicap Fund also stand out with strong risk-adjusted returns and relatively low volatility. Invesco India Focused Fund and Quant Flexi Cap Fund showcase balanced investment strategies with significant allocations to large-cap stocks, providing stability.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.