Top 5 Flexi Cap Funds for 2026 | Mutual Fund Investing | Sanjay Kathuria

Top 5 Flexi Cap Funds for 2026 | Mutual Fund Investing | Sanjay Kathuria

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Key Focus

The video discusses selecting the top Flexi Cap mutual funds for 2026 using a data-driven, factor-based approach. Emphasis is placed on risk-adjusted returns, portfolio construction, and backtesting against benchmarks.

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Assets, Sectors, and Instruments Mentioned

• Asset Class: Mutual Funds (Flexi Cap category)
• Specific Funds Mentioned:
  • Parag Parikh Flexi Cap Fund
  • HDFC Flexi Cap Fund
  • ICICI Prudential Retirement Fund
  • Franklin India Focused Equity Fund
  • JM Flexi Cap
  • SBI Focus
• Benchmark: Nifty 500 Index
• Metrics Used:
  • Sharpe Ratio
  • Up-Down Capture Ratio
  • 3-Year Rolling Returns
  • Volatility
  • Drawdown

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Methodology / Framework for Fund Selection

1. Universe Selection: Start with all Flexi Cap mutual funds (117 funds in the category).

2. Step-by-step Filtering (using Sharply tool screener):

   • Up-Down Capture Ratio: Select top 60% funds (exclude bottom 40%) to ensure funds rise more when the benchmark rises and fall less when the benchmark falls.
   • Beat Benchmark Frequency: Select funds that beat their benchmark more frequently; exclude bottom 40%.
   • 3-Year Rolling Returns: Select funds with consistent performance over rolling 3-year periods; exclude bottom 40%.
   • Sharpe Ratio: Select funds with high risk-adjusted returns; exclude bottom 40%.

3. Result: After filtering, 7 funds remain as top Flexi Cap candidates.

4. Factor Model for Ranking:

   • Assign weights to parameters based on investor risk tolerance and return preference.
   • Factors include: Up-Down Capture Ratio, Benchmark Beat %, Average 3-Year Rolling Return, 3-Year Volatility, Sharpe Ratio.
   • Use the “Sanjay Kathoria Base Model” (available with a 15% discount code SanjayK15) to automatically rank funds according to personalized preferences.

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Key Numbers & Performance Metrics

Parag Parikh Flexi Cap Fund

• 5-Year CAGR: 20.91% vs Benchmark 16.89% (outperformed by ~4% p.a.)
• Volatility: 11.76% vs Benchmark 14.38% (lower risk)
• Max Drawdown: 18% vs Benchmark 19%
• Sharpe Ratio: 1.38 vs Benchmark 0.91 (better risk-adjusted returns)
• Allocation: ~94% Large Cap, 2.39% Mid Cap, 3.36% Small Cap (large-cap heavy)

Backtested Portfolio (50% Parag Parikh Flexi Cap + 50% HDFC Flexi Cap)

• 3-Year CAGR: 22.81% vs Benchmark 17%
• Volatility: 9.62% vs Benchmark 12.86% (significantly lower risk)
• Sharpe Ratio: 1.83 vs Benchmark 1.02 (superior risk-adjusted returns)
• ₹1 lakh invested 3 years ago would have grown to ₹1.49 lakh vs ₹1.66 lakh in benchmark (Nifty 500)
• Portfolio outperformed benchmark by approx. 7-8% annualized return while taking less risk.

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Recommendations & Cautions

• Flexi Cap funds provide convenience by allowing fund managers to allocate dynamically across large, mid, and small caps.
• Investors should use factor models to weigh risk versus returns based on their own risk tolerance.
• Backtesting portfolios helps understand historical risk-adjusted performance and build confidence in investment decisions.
• The video promotes using the Sharply tool and the custom factor model (Sanjay Kathoria Base Model) for fund selection.
• The factor model and tool are available with a 15% discount using code SanjayK15 (disclosure: promotional).

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Disclosures

• The presenter offers a factor model tool with a discount code.
• The video is educational and not explicit financial advice.
• Past performance is shown as a reference and does not guarantee future results.

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Presenter

Sanjay Kathuria

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Summary

Sanjay Kathuria presents a systematic, factor-based approach to selecting top Flexi Cap mutual funds for 2026. Using filters like up-down capture ratio, benchmark outperformance, rolling returns, and Sharpe ratio, he narrows down the universe from 117 to 7 strong funds. He demonstrates how to use a factor model to rank funds according to personal risk-return preferences and shows backtested portfolio performance of Parag Parikh and HDFC Flexi Cap funds versus the Nifty 500 benchmark. The analysis highlights superior risk-adjusted returns and lower volatility of the chosen funds, recommending investors use data-driven tools for portfolio construction and risk management.