Flexi Cap Funds could be a smart choice for retail investors in today’s market

Bhubaneswar: India’s stock market, of late, stands at an exciting crossroads. Fuelled by global tariff wars and macroeconomic challenges, markets globally have been extremely volatile and India hasn’t been an exception. The India VIX (Volatility Index), a measure of volatility, currently at 15.47 (as of April 17, 2025), indicating that investors should brace for significant price swings in the near term.

In such an environment, retail investors can look for strategies that combine growth with diversification. Flexi cap funds are emerging as a compelling solution. These unique equity mutual funds invest across large-cap, mid-cap, and small-cap companies without restriction. This built-in agility allows fund managers to dynamically allocate assets depending on market cycles, macroeconomic signals, and sector developments. When stability is needed, they can shift to large caps. When risk-reward is favourable, they can tilt toward high-growth mid- and small-caps.

This built-in flexibility to reallocate assets helps portfolios remain resilient even when specific market segments underperform. Tata Flexi Cap Fund, has seen inflows worth Rs. 262 crore from Bhubaneswar in FY25. (Source: Tata MF Internal data) Overall, the category saw its assets under management rise from Rs. 4,06,429.75 crore in February 2025 to Rs. 4,35,508.97 crore in March 2025 at MF industry level, reflecting a 7% monthly jump. (Source: AMFI)

“Given the current situation, where valuation comfort varies significantly across large-caps, mid-caps and small-caps, investing in flexi caps could be more sensible choice. For retail investors navigating uncertain markets, flexi cap funds could offer a compelling blend of diversification and agility. In times of uncertainty, flexibility isn’t just a virtue—it could be a strategy in itself,” said Meeta Shetty, Fund Manager, Tata Asset Management

“Tata’s Flexi Cap Fund follows a dual investment philosophy: sector rotation, where we look to buy undervalued sectors and sell those that are overvalued and a bottom-up approach focused on selecting companies with high growth potential, sustainable business models, and low debt. By combining these strategies, our aim is to optimise risk-adjusted returns”, added Meeta.  

The mix of large-cap stability with mid- and small-cap growth opportunities creates a balanced, risk-adjusted return profile could be an ideal choice for investors seeking both resilience and upside. In a volatile environment, flexi cap funds can serve as a one-stop solution where adaptability is the key.