For equity mutual fund investors, 2025 was not an easy year. Markets swung sharply, mid and small-cap stocks corrected after years of strong rallies, and most equity funds struggled to deliver positive returns. In the middle of this uncertainty, one category stood out — not for returns, but for investor trust.
Flexi-cap funds ended November 2025 with assets under management (AUM) of Rs 5.45 lakh crore, making them the only equity mutual fund category to cross the Rs 5 lakh crore mark. What makes this milestone even more striking is that it came during a year when most equity fund categories delivered negative returns over one year.
In fact, flexi-cap funds themselves were not immune to market weakness. Like multi-cap, mid-cap, small-cap, ELSS, large & midcap funds and also thematic funds, the flexi-cap category has posted negative one-year returns. Yet, investors continued to pour money into flexi-cap schemes, pushing the category’s AUM up by nearly Rs 1.1 lakh crore in just one year, a rise of around 25% from Rs 4.35 lakh crore in November 2024.
2025: A volatile year tested investor nerves
The equity market environment in 2025 was marked by persistent volatility. After strong gains in earlier years, small-cap and mid-cap stocks faced sharp corrections as valuations cooled and earnings growth slowed. Sudden sector rotations and global uncertainties added to the instability.
This weakness is reflected across mutual fund returns. Most major equity categories have delivered negative returns over the past one year. For many investors, the focus shifted from chasing high returns to protecting capital and managing risk.
It is in this backdrop that flexi-cap funds emerged as a preferred choice.
Why flexibility mattered more than ever
Flexi-cap funds have one key advantage: freedom. Unlike other equity categories that have fixed exposure rules, flexi-cap funds can invest across large-cap, mid-cap and small-cap stocks without strict limits. This allowed fund managers to adjust portfolios quickly as market conditions changed during the year.
Sameer Mathur, MD and Founder of Roinet Solution, explains why this flexibility worked in a difficult market like 2025:
“Flexi-cap fund is a category in equity MFs which can invest in large, mid and small cap stocks without specific restrictions on allocation limits, giving free hand to fund managers to shift exposures based on market conditions. This dynamic allocation helped them capture gains where opportunities were stronger in a choppy market like in 2025. As volatility persisted, this adaptability could limit exposure to riskier segments like pure large-caps or small-caps.
“They consistently attracted highest net inflows amongst equity categories showing strong investor demand for all-cap exposure. Till date in 2025, this category’s AUM crossed Rs 5 lakh crore, making it one of the largest equity categories. Flexi Caps funds showed lower percentage falls compared to benchmarks during corrections.”
“Many flexi-cap funds have strong long-term track records which boosted confidence among both retail and institutional investors. The better risk-reward profile strengthened their appeal, as it delivers a good balance of growth and risk control withing all segments of equity,” he added.
Strong inflows despite weak returns
One of the most telling signs of investor confidence is money flow. Despite negative one-year returns, flexi-cap funds continued to attract the highest net inflows among equity categories in 2025.
Retail investors, especially SIP investors, played a big role. Monthly SIP contributions into flexi-cap funds remained steady, even when lump-sum investments slowed. In November 2025, inflows in flexi-cap funds stood at Rs 8,135 crore, according to AMFI (Association of Mutual Funds in India).
For many investors, flexi-cap funds served as a simple, all-in-one equity solution during uncertain times.
Largest equity category, second-largest overall
Flexi-cap funds are now the largest equity category among 11 equity sub-categories. With AUM of Rs 5.45 lakh crore, they account for nearly 7% of the mutual fund industry’s total AUM of Rs 81 lakh crore as of November 30, 2025.
Across all categories — equity, debt and hybrid — flexi-cap funds are now the second-largest category, just behind liquid funds, which have an AUM of Rs 5.48 lakh crore. This places flexi-cap funds ahead of several popular debt and hybrid segments in terms of size.
Long-term track record helped confidence
Another factor supporting inflows was the long-term performance history of many flexi-cap schemes. Several funds in the category have navigated multiple market cycles and delivered strong long-term returns, even if short-term performance remained under pressure in 2025.
For investors rattled by sharp swings in mid- and small-cap funds, this track record offered reassurance that temporary volatility does not necessarily derail long-term goals.
Top 5 flexi-cap funds’ performance in 1 year
HDFC Flexi Cap Fund – Direct Plan – Growth : 8.53%
Aditya Birla Sun Life Flexi Cap Fund – Direct Plan – Growth : 7.88%
Parag Parikh Flexi Cap Fund – Direct Plan – Growth : 5.34%
Kotak Flexicap Fund – Direct Plan – Growth : 5.06%
Parag Parikh Flexi Cap Fund – Direct Plan – Growth : 5.57%
What this flexi-cap funds’ trend signals
The rise of flexi-cap funds in 2025 reflects a clear shift in investor behaviour. In a year when equity returns disappointed, investors chose flexibility, diversification and risk control over aggressive bets. Crossing Rs 5 lakh crore AUM in such a challenging market underlines why flexi-cap funds became the go-to equity category for many in 2025.
Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.
