Three top flexi-cap funds, different returns: Inside HDFC, Parag Parikh and ICICI Pru portfolios

Flexi-cap mutual funds attracted Rs 6,701.80 crore in September, even as equity markets remained under pressure. But the three schemes that received the highest estimated inflows during the month delivered very different returns and followed distinct portfolio strategies.

According to ACE MF data, HDFC Flexi Cap Fund led with estimated inflows of Rs 1,634 crore, followed by Parag Parikh Flexi Cap Fund at Rs 900 crore and ICICI Prudential Flexi Cap Fund at Rs 862 crore.

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All three recorded negative returns in September, although the extent of their declines varied considerably. Their portfolios also differed in stock concentration, cash holdings, turnover and exposure to large-, mid- and small-cap companies.

Scheme-level inflows are estimates calculated using changes in month-end assets under management (AUM), adjusted for monthly returns.

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HDFC Flexi Cap: Highest inflows, strong large-cap tilt

Managed by Amit Ganatra, HDFC Flexi Cap Fund attracted the highest estimated inflows of Rs 1,634 crore in September, up from Rs 1,144 crore in August.

Despite these inflows, its AUM declined from Rs 1.14 lakh crore in August to Rs 1.09 lakh crore in September, as the fund recorded a negative monthly return of 5.89 percent.

HDFC maintained the highest large-cap allocation among the three at 69.93 percent, while mid caps accounted for 14.51 percent and small caps 9.84 percent.

The fund held 79 stocks, with its top 10 holdings accounting for 43.68 percent of the portfolio. Its cash and cash-equivalent allocation stood at 2.30 percent.

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Another distinguishing feature was its relatively low portfolio turnover of 13.28 percent, compared with 42.73 percent for Parag Parikh and 25 percent for ICICI Pru.

Although HDFC’s one-year return was negative at 1.71 percent, it delivered a three-year return of 13.79 percent and a five-year return of 14.92 percent, the highest five-year return among the three.

Parag Parikh Flexi Cap: Smallest September decline, highest concentration

Parag Parikh Flexi Cap Fund, managed by Rajeev Thakkar, received estimated inflows of Rs 900 crore in September, down from Rs 1,099 crore in August.

The fund’s AUM declined from Rs 1.47 lakh crore to Rs 1.45 lakh crore during the month.

However, Parag Parikh recorded the smallest September decline among the three, with a negative return of 2.19 percent, compared with declines exceeding 5 percent for HDFC and ICICI Pru.

Its portfolio was also the most concentrated. The fund held 56 stocks, with its top 10 accounting for 51.64 percent of the portfolio.

Large caps made up 65.68 percent, while mid-cap and small-cap allocations were relatively limited at 3.65 percent and 4.16 percent, respectively.

Another 26.51 percent was classified under ‘Others’, which includes exposures outside the three domestic market-cap categories and should not be confused with cash holdings. Cash and cash equivalents stood at 3.88 percent.

Despite holding up better in September, the fund had the weakest one-year return among the three at negative 4.14 percent. Its three-year return stood at 11.46 percent.

ICICI Pru Flexi Cap: Higher small-cap exposure, stronger medium-term returns

ICICI Prudential Flexi Cap Fund, managed by Rajat Chandak, attracted estimated inflows of Rs 862 crore in September, compared with Rs 1,091 crore in August.

Its AUM declined from Rs 25,895 crore to Rs 25,141 crore, while its September return stood at negative 6.24 percent, the steepest decline among the three.

What sets ICICI Pru apart is its higher small-cap allocation.

Small caps accounted for 23.02 percent of the portfolio, compared with 9.84 percent for HDFC and just 4.16 percent for Parag Parikh.

Large caps made up 61.10 percent, while mid caps accounted for 12.63 percent.

The fund held 74 stocks, with 43.23 percent concentrated in its top 10 holdings. Its cash allocation stood at 2.31 percent, while portfolio turnover was 25 percent.

Despite September’s decline, ICICI Pru led the three funds on six-month returns at 16.43 percent. It also delivered the highest one-year return of 3.12 percent and three-year return of 14.09 percent.

What sets the three funds apart?

Although HDFC, Parag Parikh and ICICI Pru attracted the highest estimated flexi-cap inflows in September, their portfolios were positioned quite differently.

HDFC combined a strong large-cap tilt with relatively low turnover. Parag Parikh held fewer stocks, maintained the highest concentration and recorded the smallest September decline. ICICI Pru had considerably greater small-cap exposure and stronger six-month, one-year and three-year returns.

The comparison shows that even within the flexible investment mandate of flexi-cap funds, portfolio construction and performance can vary substantially across schemes.

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