Best flexi cap mutual funds to invest in October 2024

Many mutual fund investors, especially new and inexperienced investors, are extremely concerned about the current volatility and uncertainty in the market. They don’t know whether to bet on large caps, mid caps or some others. Additionally, they wonder how they will know when to switch from one category to another when the market climate changes. Are you in the same boat? Here’s an easy way out. You can consider investing in flexi cap mutual funds.

Flexi cap mutual funds offer fund managers the freedom to invest across market capitalizations and sectors/themes. This means that fund managers can invest anywhere based on their market outlook. Flexible cap schemes are typically recommended for moderate investors to create wealth over a long period of time. Ideally, one should invest in these schemes with an investment horizon of five to seven years.

Also read | Best Tax Saving Mutual Funds or ELSS to Invest in October 2024

As said earlier, these schemes have the freedom to invest anywhere depending on the opinion of the fund manager. For example, he or she may invest more in large-cap stocks. Or, in a bull market, she might invest more in mid- or small-cap stocks. Investors should be extremely careful about this aspect. Investors should ensure that they are choosing a scheme that is in line with their risk appetite. For example, some flexi cap regimes may be more conservative than others. It’s up to you to identify the one that suits your temperament.

If you are planning to invest in flexi cap funds, here are our recommendations. We will closely monitor the performance of these schemes and update you on this every month. Aditya Birla Sun Life Flexi Cap Fund has been in the third quartile for 18 months. The UTI Flexi Cap Fund has been in the fourth quartile for 17 months. Canara Robeco Flexi Cap Fund has been in the third quartile for 16 months. PGIM India Flexi Cap Fund has been in the fourth quartile for eight months.

Also read | 2 equity MFs turn Rs 10,000 monthly SIP into over Rs 10 million in 29 years

Best Flexi Cap Schemes to Invest in October 2024

Here is our methodology:

ETMutualFunds.com has employed the following parameters to select the equity mutual fund schemes.

1. Average Rolling Returns: Scrolled daily for the last three years.

2. Consistency over the last three years: Hurst Exponent, H is used to calculate the consistency of a background. The H exponent is a measure of randomness in a fund’s NAV series. Funds with high H tend to have low volatility compared to funds. The H exponent is a measure of randomness in a fund’s NAV series. Funds with high H tend to have low volatility compared to funds with low H.

I) When H = 0.5, the return series is considered a geometric Brownian time series. This type of time series is difficult to predict.

ii) When H is less than 0.5, the series is said to be mean-reverting.

iii) When H is greater than 0.5, the series is said to be persistent. The higher the value of H, the stronger the trend of the series

3. Downside Risk: We only consider the negative returns provided by the mutual fund scheme for this measure.

X = Returns below zero

S = Sum of all squares of X

Z = Y/number of days needed to calculate the proportion

Negative risk = square root of Z

4. Superior Performance: It is measured by Jensen’s Alpha of the last three years. Jensen’s Alpha shows the risk-adjusted return generated by a mutual fund scheme in relation to the expected market return predicted by the Capital Asset Pricing Model (CAPM). A higher Alpha indicates that the portfolio’s performance has exceeded market-predicted returns.

Average returns generated by MF Scheme =

(Risk Free Rate + Beta of the MF Scheme * {(Average index return – Risk Free Rate}

5. Asset Size: For equity funds, the asset size limit is Rs 50 million

(Disclaimer: Past performance is no guarantee of future performance.)