Mumbai, Jan 20: Flexi cap mutual funds are witnessing a strong growth in India with Assets under Management surging by 148.28 per cent over last four years to touch Rs 5.52 lakh crore in December 2025, as compared with Rs 2.22 lakh crore in December 2021. The unique ability of these funds to invest across large-cap, mid-cap, and small-cap stocks without rigid allocation rules, giving fund managers the flexibility to adapt to changing market conditions, has made them a huge draw for investors, ICRA Analytics said.
Net inflows into these funds have increased by nearly 315.97 per cent over last four years at Rs 10,019 crore in December 2025, as against Rs 2,409 crore in 2021. Inflows have grown by 78.44 per cent since the beginning of this financial year (2025-26) from Rs 5615 crore in March 2025.
“Flexi Cap Mutual Funds allow fund managers the flexibility to adapt to changing market conditions and take a dynamic approach which ensures better diversification and risk management, combining the stability of large caps with the growth potential of mid and small caps. Investors are drawn to these funds for their resilience during market downturns, as they typically offer better downside protection compared to pure mid- or small-cap funds. Strong historical performance, with annualised returns of 16.06% over five years (as on Dec 31, 2025), and significant inflows further highlight their appeal,” Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics, said.
The number of folios has doubled in the last four years at 2.21 crore in December 2025, up from 1.10 crore in December 2021. Flexi cap funds serve as an all-weather option for long-term, goal-based investing, offering simplicity and balanced exposure, making them a safer alternative to aggressive mid- and small-cap strategies.
There are as many as 24 flexi cap funds currently available in the market and have delivered average five-year annualized returns of around 16.08%, with top performers like HDFC Flexi Cap, Quant Flexi Cap, Bank of India Flexi Cap and JM Flexi Cap generating annualized returns above 20% over five years (as on Dec 31, 2025).
“The growth outlook for Flexi Cap Mutual Funds in India is extremely positive, supported by strong historical performance and rising investor preference for flexibility and diversification. Their adaptability makes them a preferred choice for long-term goals such as retirement and education, especially in uncertain markets where rigid allocation strategies may underperform. Investors expect this category to maintain double-digit annual growth, driven by increasing retail participation, robust SIP inflows, and India’s structural equity market expansion,” Kumar said.
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