What Caused the 148% Surge in Flexi Cap Funds' AUM in India?
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Synopsis
India's flexi cap mutual funds have seen a remarkable 148% increase in assets under management over the past four years, indicating a growing trend among investors seeking flexible investment options. Discover how these funds are outperforming others and attracting more retail participation.
Key Takeaways
- 148.28% increase in AUM over four years.
- Net inflows have surged by nearly 316%.
- Flexi cap funds provide diversification across various market capitalizations.
- Investors appreciate their resilience in downturns.
- Average five-year annualized returns around 16.08%.
Mumbai, Jan 20 (NationPress) The assets under management (AUM) for India's flexi cap mutual funds have dramatically increased by 148.28% over the past four years, according to a report released on Tuesday. This surge can be attributed to the performance of leading funds, which have yielded over 20% returns in the last five years.
The analysis from ICRA Analytics indicates that the AUM of flexi cap funds reached Rs 5.52 lakh crore in December 2025, a significant rise from Rs 2.22 lakh crore in December 2021.
Net inflows into these funds have skyrocketed by nearly 316% over the same period, amounting to Rs 10,019 crore in December 2025, compared to Rs 2,409 crore in 2021. Additionally, inflows have surged by 78.44% since the start of FY26, from Rs 5,615 crore in March 2025.
Investors have been attracted to these funds due to their ability to invest across large-cap, mid-cap, and small-cap stocks without strict allocation guidelines, the report noted.
“Flexi cap fund managers possess the adaptability to respond to evolving market conditions, employing a dynamic approach that aids in achieving better diversification and risk management. This strategy effectively combines the stability of large caps with the growth potential of mid and small caps,” explained Ashwini Kumar, Senior Vice President and Head Market Data at ICRA Analytics.
Investors are particularly drawn to these funds for their resilience during market declines, as they generally offer superior downside protection compared to pure mid- or small-cap funds, Kumar added.
Currently, around 24 flexi cap funds available in the market have provided an average five-year annualized return of approximately 16.08%, with top performers achieving annualized returns exceeding 20% over the last five years.
The number of flexi cap folios has doubled to 2.21 crore in December 2025, up from 1.10 crore in December 2021.
Investors anticipate that this category will sustain double-digit annual growth, fueled by increasing retail participation, strong SIP inflows, and the structural expansion of India's equity market, according to the report.
Point of View
The soaring AUM of flexi cap funds in India signifies a shift in investment preferences, reflecting a growing appetite among retail investors for diversified portfolios that balance risk and reward. This trend is pivotal for the financial landscape of India, and it underscores the need for investors to adapt to evolving market conditions.
NationPress
21/01/2026
Frequently Asked Questions
What are flexi cap funds?
Flexi cap funds are mutual funds that invest across large-cap, mid-cap, and small-cap stocks without strict allocation mandates, allowing for flexibility based on market conditions.
Why are investors choosing flexi cap funds?
Investors are attracted to flexi cap funds for their potential for higher returns, better downside protection during market downturns, and the flexibility they offer in asset allocation.
What has driven the growth in flexi cap funds' AUM?
The growth has been driven by strong market performance, increased retail participation, and robust systematic investment plan (SIP) inflows.
How have flexi cap funds performed in recent years?
Many flexi cap funds have outperformed traditional investment options, with average annualized returns of around 16.08% over the past five years.
What is the future outlook for flexi cap funds?
The outlook remains positive, with expectations of sustained double-digit growth driven by continued retail interest and market expansion.
