Record inflows help flexicap funds' AUM surpass ₹5 trillion milestone

First diversified equity category to achieve the milestone

Flexicap funds, which have been drawing record inflows despite easing in overall equity mutual fund (MF) investments, have become the first diversified equity category to achieve assets under management (AUM) of ₹5 trillion.

 

The category has drawn net inflows of nearly ₹54,000 crore in the first nine months of calendar 2025 (M9CY25), accounting for 20 per cent of the total net equity MF inflows.

 

Its share in total inflows was just 10 per cent in 2024. The net inflow has been over ₹7,000 crore each in the previous three months, with August tally of ₹7,679 crore being the highest ever.

 

According to experts, the surge in inflows into flexicap funds signals a shift in investor preference after a volatile year.

 

Given the largecap tilt, flexicap funds have done better than midcap- and smallcap-focused funds in the near term. Also, the outperformance has helped them lower the return gap with smallcap and midcap funds in the long term.

 

“Given the volatility, investors are preferring flexicap funds for fresh equity allocations. These schemes are better suited as they provide exposure to stocks across market capitalisation while being comparatively less volatile,” said Rushabh Desai, founder of Rupee with Rushabh Investment Services.

 

Sriram BKR, senior investment strategist at Geojit Financial Services, said the flexicap’s better near-term returns could also be a driver. 

 

“Data shows that in terms of one-year performance as of September 2025, average return from multicap and flexicap funds has been better than that of midcap and smallcap funds,” he said.

 

The category has attracted the highest inflows among all equity fund segments in five of the past six months. It is now on the verge of reclaiming its position as the largest equity fund category. Flexicap funds, which became the largest equity fund category soon after being introduced in early 2021, had lost the position to sectoral and thematic funds in July 2024.

 

The gap in the total assets being managed by sectoral and thematic schemes and flexicap funds is now around ₹5,500 crore.

 

Flexicap schemes account for 15 per cent of the total assets managed by active equity schemes. Two of the largest schemes in the category — of Parag Parikh Financial Advisory Services and HDFC — alone manage nearly ₹2 trillion.

 

Flexicap funds provide exposure to stocks in each of the three market segments — largecap, midcap, and flexicap. While flexicap funds can invest in largecap, midcap, and smallcap stocks in any proportion, the schemes in the category have a largecap bias (50-70 per cent allocation) to align with their benchmarks (NSE 500 and BSE 500).

 

The “proportionate” exposure to stocks across the marketcap segments makes flexicap among the most recommended funds in MFs.

 

Flexicap funds have led the AUM chart for years despite being a late addition to the equity MF category. 

 

Flexicap was announced in late 2020 but soon became a leading category, with most multicap funds choosing to categorise as flexicap ones.

 

Sectoral and thematic fund category, with as many as 227 schemes spanning diverse sub-categories compared to around 40 in other segments, was the first to hit the ₹5 trillion milestone among all MF categories.