Flexi cap mutual funds have experienced a challenging year, with no scheme delivering double-digit returns. According to reports from Mint, the best-performing scheme, Quant Flexi Cap Fund, returned 9.91% over the past year, while only five funds managed to generate returns above 8%. The broader category struggled significantly, with the average flexi cap fund generating a return of just 0.82% over the past year. Of the 40 schemes in the category, 33 delivered less than 5% returns, while 19 posted negative returns.
The muted performance was largely driven by market conditions rather than poor stock selection, according to experts. As reported by Mint, Hrishikesh Palve, Director at Anand Rathi Wealth, explained that flexi cap funds continued to maintain a significant allocation to large-cap stocks, which underperformed during the period. As of June 2026, the category had an average allocation of around 55% to large caps, while exposure to mid-cap and small-cap stocks stood at about 19% each. This proved to be a headwind because market leadership shifted away from large-cap stocks, with the Nifty 50 declining 4.5% and the Nifty 100 falling 3% over the past year, while the Nifty Midcap 150 gained nearly 5% and the Nifty Smallcap 250 rose around 1%.
Despite the challenging environment, some schemes benefited from strategic positioning. According to Mint, Palve pointed to schemes from Bank of India, Navi, ICICI Prudential and Aditya Birla Sun Life, which benefited from higher exposure to mid-cap and small-cap segments. Quant Flexi Cap Fund, the category's top performer, also gained from its sector positioning. The top five performers included Quant Flexi Cap Fund (9.91%), Navi Flexi Cap Fund (9.33%), ITI Flexi Cap Fund (9.20%), Bank of India Flexi Cap Fund (9.06%), and Helios Flexi Cap Fund (8.52%).
Despite the challenging performance, experts emphasize that flexi cap funds continue to add value through active management. As reported by Mint, Palve noted that flexi cap funds have still generated an average alpha of around 1.8 percentage points over their benchmark during the last one year, showing that active fund managers added value despite a difficult market environment. Rishabh Garg, CEO of FundsIndia, explained that the broader market correction has been the biggest reason behind the subdued returns, noting that when all three market segments have gone through a tough phase, the category will naturally reflect that.
Experts believe investors should avoid taking investment decisions based solely on one year's performance. According to Mint, Palve emphasized that equity markets move in cycles and leadership shifts across market-cap segments over time, while the category has delivered an average return of 11.5% over the last five years, highlighting their long-term wealth creation potential. Garg agreed, noting that flexi cap funds should ideally be evaluated over a five- to seven-year investment horizon, with the bigger risk being investors reacting to short-term performance by exiting at the wrong time.
