The Best Flexi-Cap Fund to Invest in 2022

We will find the best Flexi-cap mutual fund to invest in for 2022 and review the performance of our choice of best Flexi-cap (or Multi-cap) fund of 2021.

A Flexi-cap fund is a mutual fund that can invest irrespective of the market cap of the companies. The advantage of a Flexi-cap fund over a large-cap or mid-cap fund is that it doesn’t limit the amount of exposure it can take in a mid or small-cap company in the rising market. Further, it doesn’t have any restriction to move the allocation from the small or mid-cap fund to large-cap stocks in a falling market.

So it is a balancing act between the large-cap, mid-cap, and small-cap fund, taking the best of both the world.

However, One may see that the Flexi-cap fund has an undue advantage, but it also means that it can underperform badly if the fund manager is on the wrong side of the call. For example, if the fund remained invested in the large-cap fund instead of mid-cap or small-cap, the fund’s underperformance compared to its peers could be significant.

Still, choosing allocation to mid-cap or large-cap is with the fund manager can be more beneficial to the investor as highly qualified fund managers are more equipped to make better decisions in the market than you or me.

Still, if you think it is better to do it yourself, check out:

Best Large Cap Funds To Invest in 2022, Best Midcap Fund to Invest in 2022, along with the Best Small Cap Fund to Invest in 2022.

The Top Flexi-Cap Funds for 2022

We will use the process from the 4 and 5 star rated direct Flexi-cap funds by ValueResearchOnline, and we will choose the funds that can outperform in 2022.

We selected only the funds with more than 2000Cr AUM or assets under management.

Now for all the funds, let’s make the table for allocation to Giant cap, large-cap, midcap, and small-cap.

*All data as per ValueResearchOnline as of 18Dec2021

Best Multi-cap Fund to Invest in 2022

From the above table, depending on your view for 2022, one should select the best multi-cap fund to invest in.

I believe that the Indian economy is on the right track to recovery, so mid-cap along with larger size small-cap segment will outperform. So my best multi-cap fund is the one that has slightly more exposure to mid-cap and small-cap segments.

DSP Flexi Cap

With more than 40% of its asset allocation in the mid and small-cap segment, I think the DSP Flexi Cap fund is more likely to outperform in 2022.

I haven’t chosen the one with maximum mid-cap exposure but a proper balance of 60:40 for a large and giant cap to mid and small-cap.

HDFC Retrmnt Svngs Eqt

If you want to take on more risk for better returns, the HDFC Retrmnt Svngs Eqt fund may be right for you. It has more than 50% of its asset allocation in the mid and small-cap segment.

However, if the market corrects in 2022, the fund can underperform. However, for SIP, it can be a better choice of the fund because one may be buying in the dips.

How Well The Best Flexi-Cap Fund of 2021 Performed?

The best multi-cap fund of 2021 was Parag Parikh Long Term Equity and DSP Equity, and SBI Focused Equity.

• Parag Parikh Long Term Equity has given a whopping return of ~47% for the entire year, which is incredible. We selected the fund because of its exposure to the mid-cap segment of the market. So it performed as expected. So the return of the fund is incredible.
• DSP Equity has given a whopping return of ~33% for the whole year, which is not bad either.
• SBI Focused Equity has given a whopping return of ~42% for the whole year, also a great return.

Final Thoughts

Do not switch funds every year and pay the entry and exit load or long term capital gains tax.

Suppose you have not selected a better performing fund earlier or want to move to a new fund for any other reason (move to regular to direct funds). Then, don’t exit the investment in the old fund. Instead, stop the SIP and let the invested amount remain and grow over time in those funds. Then, create a new SIP in the new funds.

As always, this isn’t an endorsement of any fund. Instead, the emphasis is on the process. The funds may be doing well now, but use a similar approach and find the best fund to invest in when you want to invest. Use ValueResearchOnline and CRISIL as and when you want to invest in 2022.