In the past couple of years, Flexi Cap mutual funds have piqued investors’ attention. These funds are unique as they can invest in companies of various sizes and/or sectors and can change with market dynamics. Some of the popularly opted Flexi Cap Funds include the PPFAS flexi cap fund (Parag Parikh Flexi Cap) and Quant Flexi Cap.
Flexi funds suit long-term investment plans, with fluctuating market conditions providing enough opportunity to invest different funds into as many sectors as possible and whatever should perform the best. With each fund actively managed, you could see the additional possibility of even higher returns. Below is the breakdown of everything you need to know to help you determine which is best for you.
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Parag Parikh Flexi Cap
PPFAS flexi cap fund is an open-ended equity scheme investing in large, medium, and small-cap companies. The first allocation of funds was made on 24 May 2013. The fund pre-commits to allocating at least 65% of the overall corpus to listed Indian companies. The Fund is benchmarked against Nifty 500 TRI and has been above Benchmark from inception till date.
The fund currently has 70.65% exposure to Indian equities, which consists of 49.54% for large-cap companies, 4.80% for medium-cap companies, and 7.48% for small-cap companies. The fund has a 4.31% allocation into debt instruments, of which 3.75% is allocated to low-risk securities and 0.56% to government x securities. The fund may be suitable for any investor looking to apply for time horizons of 3 to 4 years, ideally, what works best in terms of continued 7-year investments.
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Here are the top five investments sector-wise:
- Financials – 24.21%
- Reverse Repo/Treps – 12.90%
- Foreign securities – 12.45%
- Utilities – 8.84%
- Finance – Banks – Private Sector – 7.89%
Here are the top five investments in companies:
- TREPS – 12.90%
- HDFC Bank Limited – 7.98%
- Power Grade Corporation of India Ltd. – 6.74%
- Bajaj Holdings and Investment Limited – 6.64%
- ITC Limited – 5.65%
Quant Flexi Cap Fund
Quant Flexi Cap fund is indeed also an open-ended investment scheme that invests in large-cap, mid-cap, and small-cap companies. The first date of allocation into the fund was 17 October 2008, and there is no lock-in. The fund follows the NIFTY 500 TRI benchmark and has performed consistently through the years.
At present, the fund has 77.61% of its corpus in domestic companies. The allocation comprises 43.36% in large-cap, 15.79% in mid-cap, and 7.55% in small-cap equities. Additionally, the fund has 3.36% in debt instruments, which is completely in government securities. This fund should ideally be invested for 3 to 4 years, but preferably for a 7-year duration.
Here are the top five investments sector-wise:
- Consumer staples – 14.76%
- Consumer Discretionary – 12.42%
- Derivatives – 9.66%
- Energy – 9.55%
- Utilities – 8.85%
Here are the top five investments in companies:
- Reliance Industries Limited – 9.55%
- ITC Limited – 8.76%
- TREPS – 7.82%
- Samvardhana Motherson International Ltd – 6.93%
- Adani Power Limited – 5.54%
Comparison
PPFAS flexi cap fund and Quant Flexi Cap fund are two of the most popular funds in the flexi cap category, so drawing comparisons is inevitable. Here is a detailed comparison between both the funds under various parameters and how they fare.
| Parameters | PPFAS flexi cap fund | Quant Flexi Cap |
| Risk | Very high | Very high |
| Expense ratio (Direct Fund) | 0.63 | 0.59 |
| Current NAV | ?89 | ?121.9 |
| Exit load | Withdrawals above 10% of investment will be charged at 2% for withdrawal within 365 days and 1% between 365 days and 730 days. Nil afterward. | 1% for any withdrawals within 15 days. Nil afterward. |
| Returns | 41.9% – 1 year 18.8% – 3 years 27% – 5 years | 57% – 1 year 25% – 3 years 36.9% – 5 years |
| Minimum first investment | ?1,000 | ?5,000 |
| Fund Management | Rajeev Thakkar HDFC Bank as Custodian | Sanjeev Sharma Deutsche Bank as Custodian |
Conclusion
Both funds have done extraordinarily well in the long run. If you are an investor looking to invest some money for the long term, you could choose either fund without error. Both funds have performed well relative to their benchmarks. While the quant flexi cap fund performed better during the review period, with a lower expense ratio, it also had a higher initial investment for investors. The PPFAS flexi cap fund has performed well with consistent results and a lower initial investment which gives investors more accessibility. Investors need to be mindful both of the funds require a very large risk appetite. You will want to consider the investment time frame and risk factors you are open to taking and your overall portfolio before selecting either fund.