India’s flexi cap mutual funds have experienced a notable surge in assets under management (AUM) over the past four years, with top funds delivering over 20% returns in the last five years, as per a report by ICRA Analytics. The AUM of flexi cap funds reached Rs 5.52 lakh crore in December 2025, a substantial increase from Rs 2.22 lakh crore in December 2021.
Net inflows into these funds have risen by almost 316% over the last four years, reaching Rs 10,019 crore in December 2025 compared to Rs 2,409 crore in 2021. Inflows have shown a growth of 78.44% since the beginning of FY26, starting from Rs 5,615 crore in March 2025.
Investors have been attracted to these funds due to the flexibility they offer in investing across large-cap, mid-cap, and small-cap stocks without strict allocation rules, as highlighted in the report by ICRA Analytics. Fund managers of flexi cap funds have the ability to adjust to market changes, ensuring better diversification and risk management by combining the stability of large caps with the growth potential of mid and small caps.
According to Ashwini Kumar, Senior Vice President and Head Market Data at ICRA Analytics, investors find these funds appealing for their resilience during market downturns, providing better downside protection compared to pure mid- or small-cap funds. Currently, there are around 24 flexi cap funds in the market that have delivered an average five-year annualized return of approximately 16.08%, with top performers achieving annualized returns exceeding 20% over five years.
The number of flexi cap folios has doubled to 2.21 crore in December 2025 from 1.10 crore in December 2021. Investors anticipate continued double-digit annual growth in this category, driven by rising retail participation, strong SIP inflows, and the structural expansion of India’s equity market, as outlined in the report.
