Flexi-cap funds in focus as smids falter

A silent pivot

- Abhinaba Saha [e-mail]

Investors are quietly reshaping how they take equity exposure through mutual funds. After chasing smalland mid-cap schemes for a while now, they are now pulling back from narrowly defined market-cap bets and funnelling money into funds that offer room to manoeuvre. Flexi-cap schemes, long seen as a middle-ground category, have emerged as the preferred gateway for equity allocations.

This shift comes as valuations remain elevated even as earnings momentum cools, prompting investors to seek safety without stepping out of equities. These schemes can move freely across large-, midand small-caps, without fixed allocation limits, allowing managers to shift exposure wherever valuations and opportunities look most compelling.

Net inflows into flexi-cap funds jumped 27% month-on-month in October to ₹ 8,923 crore, according to a Mint analysis of the latest data from the Association of Mutual Funds of India (Amfi), even as overall equity inflows fell nearly 19%. Inflows into the category are up 72% since October 2024.