PPFAS, HDFC And Kotak Flexi-Cap Funds: Mrin Agarwal's Tried And Tested Picks

Market tides can turn swiftly, finding a fund that offers a balance between both stability and growth potential is key.

Flexi-cap funds marry growth and stability with its investment spread offering a mix of large, mid- and small-cap funds. The category especially works for investors who prefer to entrust their investment decisions to seasoned fund managers, according to Mrin Agarwal, founder of Finsafe India.

The strength of flexi-cap funds lies in their ability to adapt while sticking to their investing principles, according to this expert.

"I like flexi-cap funds as fund managers can decide their conviction. They are not held back by a cap and there is a lot of flexibility," she explains. This flexibility allows fund managers to shift allocations across large, mid-, and small-cap companies based on their convictions.

"The flexi-cap funds have a large-cap-oriented allocation, which makes it less volatile as compared to mid and small caps," Agarwal notes. This bias towards larger, more established companies provides a cushioning effect during market downturns, offering a relatively stable option compared to the turbulent returns of mid- and small-cap categories.

Agarwal emphasises that the liquidity issue does not affect the category just because of the large-cap bias. "There is a fair amount of liquidity that is also available in these stocks," she explains.

When selecting a flexi-cap fund, there is always a choice for investors between a tried and tested fund or newer and nimble funds. The choice is clear for Agarwal, as she sees the need for a proven track record.

"I would always pick a tried and tested flexi-cap fund. I would always like to bank on previous history that is there," she said. She also stressed the need to assess the investor's personal risk profile as well.

When asked about the factors to look for in flexi-cap funds, Agarwal said that ultimately, it boils down to performance and whether the fund managers have stuck to their style of management.

While assets under management might seem like a crucial factor, Agarwal believes that AUM might not be a deciding factor for returns. "I think the ability to stick to style and processes in investing is a bigger factor," she said.

The beauty of the flexi-cap category, as Mrin Agarwal explains, lies in its suitability for a wide range of investors. With typically around 50% allocation to large caps, offering a good spread of a slightly more conservative portfolio, she explains. Some funds even provide exposure to global funds, she highlighted.

Agarwal's top picks, which have consistently stood the test of time based on longer-term perspectives, and down capture parameters include some of the largest funds in the category.

Agarwal picks PPFAS Flexi Cap Fund for its international exposure, HDFC Flexi Cap Fund and Kotak Flexi Cap Fund.

These funds, according to Agarwal, offer a balanced and stable investment, given their stable returns in the longer term and consistent investing style.