Key facts
- Net inflows into flexi cap mutual funds dropped to Rs 5,175 crore in May, a 49% decrease from April.
- This moderation is part of a wider trend affecting all equity mutual fund categories.
- Experts cite geopolitical tensions and profit-taking as reasons for the slowdown.
- Investors are advised to maintain long-term investment strategies and continue SIPs.
- Flexi cap funds remain a preferred category for investors due to their allocation flexibility.
- The current market conditions are seen as a measured entry point for new investors.
Net inflows into flexi cap mutual funds nearly halved in May, falling to Rs 5,175 crore from a record Rs 10,147 crore in April. This moderation, a 49% month-on-month decline, is part of a broader trend across the equity mutual fund industry, which saw a 40% drop in inflows.
Experts attribute the slowdown to a combination of factors, including rising geopolitical tensions, particularly concerning the US-Iran conflict and potential disruptions to global oil supplies, alongside expected profit-booking after a strong market rally. Despite the decrease, flexi cap funds continued to attract the largest inflows among equity categories.
Analysts advise existing investors to remain focused on their long-term investment plans and continue Systematic Investment Plans (SIPs), rather than reacting to short-term monthly flow data. Fund performance is seen as more dependent on how managers deploy capital rather than the volume of new money entering the category.
For new investors, the current environment, characterized by market consolidation and elevated cash levels held by fund managers, is considered a measured entry point. Flexi cap funds are highlighted as suitable for first-time equity investors due to their flexibility in allocating across market capitalizations, with managers handling the investment decisions.
As of May 2026, flexi cap funds held approximately 61% in large-cap stocks, 20% in mid caps, and 19% in small caps. This flexibility allows managers to adjust allocations based on market conditions, offering a potential advantage over multi-cap funds which have mandated minimum allocations across market segments.