According to reports from the source, a flexi-cap fund holding 48% in Nifty 50 stocks can overlap just 38% when using SEBI's minimum-weight method for calculating real overlap. This calculation method ensures a more accurate assessment of portfolio concentration compared to simple percentage-based overlap calculations.
As reported by the source, the minimum-weight method is a regulatory requirement that funds must use to determine actual portfolio overlap. This methodology provides a more sophisticated approach than traditional percentage-based overlap calculations, ensuring that funds accurately assess concentration risk in their portfolios.
According to the source analysis, the 38% overlap represents a significant reduction from the 48% Nifty 50 allocation in the flexi-cap fund. This means that despite holding nearly half of its portfolio in Nifty 50 stocks, the fund's actual concentration risk is substantially lower due to the minimum-weight methodology applied to calculate overlap.
When evaluating mutual fund performance, investors should consider multiple key factors beyond simple return figures. Assets Under Management (AUM) size influences operating costs, liquidity requirements, and transaction management capabilities across different market segments. SEBI requires schemes to display a riskometer indicating one of six risk levels - Low, Low to Moderate, Moderate, Moderately High, High, or Very High - providing a broad risk profile indication alongside investment objectives and portfolio composition.
This overlap calculation provides investors with a clearer understanding of concentration risk in flexi-cap funds. The 38% overlap figure represents the actual percentage of the fund's portfolio that is duplicated in Nifty 50 stocks, providing a more accurate assessment of diversification than simple percentage-based calculations. For meaningful performance comparisons, investors should examine trailing returns across multiple time frames, consider rolling returns over multiple overlapping periods, and compare funds against their benchmark Total Return Index (TRI) to understand historical performance context. The current market shows several new NFOs opening in October 2026, including Axis Nifty EV & New Age Automotive Index Fund (closing October 30, minimum ₹100), Carnelian Small Cap Fund (closing October 30, minimum ₹500), and Motilal Oswal Nifty Midcap150 Plus 8-13 yr G-Sec 70:30 Index Fund (closing October 26, minimum ₹500).
