Flexi-cap vs Multi-cap Funds: Which Indian Mutual Fund Strategy Delivers Bigger Returns?

Flexi-cap funds offer mutual fund managers the flexibility to invest in large, mid, and small-cap stocks in any proportion, allowing them to adapt to market conditions, liquidity cycles, or sentiment shifts. Multi-cap funds, on the other hand, mandate a minimum allocation of 25% to each of these market cap segments, enforcing diversification but limiting tactical concentration.

Based on data up to November 10, 2025, Flexi-cap funds as a category have compounded at a 10-year CAGR of 13.89%, a 5-year CAGR of 18.27%, and a 3-year CAGR of 16.15%. Multi-cap funds show a 3-year CAGR of 18.84% and a 5-year CAGR of 4.57%. The Nifty 500 TRI benchmark posted a 10-year CAGR of 14.97%. This indicates Flexi-caps have demonstrated stronger long-term consistency, while Multi-caps have shown superior shorter-term momentum.

Specific funds are highlighted: Parag Parikh Flexi Cap Fund (18.46% 10-yr CAGR), HDFC Flexi Cap Fund (17.42% 10-yr CAGR), and Aditya Birla Sun Life Flexi Cap Fund (15.74% 10-yr CAGR). Among Multi-caps, Quant Multi Cap Fund leads with 18.55% 10-yr CAGR, followed by Sundaram Multi Cap Fund (16.60% 10-yr CAGR) and Nippon India Multi Cap Fund (16.23% 10-yr CAGR).

Key metrics like Sharpe Ratio and Beta are used to assess risk-adjusted performance. A higher Sharpe Ratio suggests better returns per unit of risk, while Beta indicates volatility relative to the market.

Impact: This news significantly impacts Indian investors by providing data-driven insights to choose between Flexi-cap and Multi-cap funds. It guides investment decisions, potentially influencing fund flows and performance within the Indian mutual fund industry.

Difficult Terms: CAGR (Compound Annual Growth Rate): The average annual rate of return over a specified period longer than one year. NAV (Net Asset Value): The per-share market value of a mutual fund. AUM (Assets Under Management): The total market value of all assets managed by an investment company or fund. Expense Ratio: The annual fee charged by a mutual fund to cover operating expenses. Portfolio Turnover Ratio: A measure of how frequently a fund trades its holdings. Sharpe Ratio: A measure of risk-adjusted return, indicating how much excess return is generated per unit of risk. Beta: A measure of a stock's or fund's volatility in relation to the overall market.