Ever looked at a massive fund and wondered if it’s just too big to move? That’s the question everyone’s asking about the HDFC Flexi Cap Fund lately. With its assets under management (AUM) crossing the ₹96,000 crore mark as of early 2026, it is basically the "elephant in the room" of the Indian mutual fund space.
People love to hate on big funds. They say size kills agility. But then you look at the 3-year trailing returns of roughly 21.6%, and the "size problem" suddenly feels like a myth.
The truth is, this fund is a bit of a survivor. It’s been through the Dot-com bubble, the 2008 crash, and the 2020 lockdown chaos. It’s the second-largest flexi-cap in the country, but it doesn't behave like a sleepy giant.
The Chirag Setalvad Shift
If you’ve been following the fund, you know there was a major change in the cockpit recently. Roshi Jain, who managed the fund after the legendary Prashant Jain, moved on in late 2025. Now, Chirag Setalvad, the head of equities at HDFC AMC, is calling the shots.
Setalvad isn't some new kid on the block. He’s been a fixture at HDFC for ages, known for a steady hand and a "Growth at a Reasonable Price" (GARP) philosophy.
Honestly, a fund manager change can be scary. But in this case, it feels more like a homecoming. The fund’s strategy remains focused on high-conviction bets rather than trying to mimic an index.
Why HDFC Flexi Cap Fund Still Dominates
Most people think "flexi-cap" just means a mix of everything. While that’s technically true, this fund is currently playing a very specific game. As of January 2026, it’s heavily tilted toward large-cap stocks, which make up over 70% of the portfolio.
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Is that a bad thing? Not necessarily.
When markets get volatile—like they've been recently with high oil prices and global trade tensions—having a floor of ICICI Bank, HDFC Bank, and Axis Bank provides a certain level of comfort. These three banks alone account for nearly 25% of the entire fund.
What's inside the hood?
The portfolio isn't just a bank-fest, though. There’s a lot of "old economy" muscle here.
- Banks & Finance: Roughly 35-39% (The backbone).
- Automobiles: Around 10-12% (Betting on the consumption recovery).
- Technology: About 11% (Recent additions to Infosys suggest they aren't ignoring IT).
Interestingly, they’ve been trimming some "new-age" stocks. They recently cut back on Swiggy and Nykaa (FSN E-Commerce) while adding a new name called Eternal. It shows the manager is willing to dump the trendy stuff if the valuation doesn't make sense anymore.
The Return Reality Check
Let's talk numbers because that's what actually pays the bills. If you had started a SIP five years ago, you’d be looking at an annualized return of roughly 22%.
Compare that to the NIFTY 500 TRI (its benchmark), which hovered around the 15-16% mark for similar periods. That’s a massive gap. Since its inception way back in 1995, the fund has delivered a CAGR of over 18%.
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But don't get blinded by the green.
The year 2025 was a bit of a reality check for the category. The average flexi-cap return was only about 3.69%. In that same period, HDFC Flexi Cap managed to stay in the green, but it wasn't the triple-digit moonshot some investors have grown used to.
Is the "Very High Risk" Label Just Scary Talk?
The SEBI risk-o-meter labels this as "Very High Risk."
Don't let that keep you up at night. Basically, any equity fund that isn't a debt fund gets that label. The real risk measures tell a different story.
The fund’s Beta is around 0.78. In plain English? It’s less volatile than the broader market. When the market drops by 10%, this fund historically drops less. Its Sharpe Ratio (which measures risk-adjusted return) sits at a solid 1.43, significantly better than the category average of 0.81.
Basically, you’re getting more "bang for your buck" in terms of the risk you're taking.
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The Taxation Sting of 2026
You've gotta account for the taxman. Since the 2024 budget changes, the tax landscape for funds like the HDFC Flexi Cap Fund is a bit steeper:
- Short Term (under 1 year): 20% on gains.
- Long Term (over 1 year): 12.5% on gains (after the ₹1.25 lakh exemption).
If you’re planning to jump in and out within 12 months, you also get hit with a 1% exit load. This fund is built for the long haul. If you don't have a 5-year horizon, honestly, you're better off looking elsewhere.
Common Misconceptions
People often think they should buy the "IDCW" (Dividend) option to get regular income.
Stop.
Unless you are a retiree who absolutely needs that cash flow, the Direct Growth option is almost always better. The expense ratio for the Direct plan is significantly lower (around 0.67%) compared to the Regular plan (1.33%). Over 20 years, that 0.6% difference can cost you lakhs of rupees in lost compounding.
Actionable Insights for Your Portfolio
If you're looking at this fund today, here's how to actually use it.
- Treat it as a Core Holding: This shouldn't be your "side bet." Because it’s so diversified and large-cap heavy, it works best as the foundation of your portfolio.
- Watch the Manager: Chirag Setalvad has a great track record, but he’s still settling into this specific fund. Give it two or three quarters to see if the "Eternal" and "Infosys" type moves continue.
- The SIP Strategy: Don't dump a massive lump sum right now. Markets are at high valuations in 2026. A Systematic Investment Plan (SIP) of even ₹100 is the way to go to average out your costs.
- Rebalance Annually: If this fund grows so much that it now makes up 80% of your money, it's time to trim and move some to debt or gold.
The HDFC Flexi Cap Fund isn't a "get rich quick" scheme. It’s a "get wealthy slowly" machine. It’s for the person who wants to beat the market without having to check their app every fifteen minutes.
Next Steps:
- Check your current portfolio overlap. If you already own a Nifty 50 Index fund and a Banking sectoral fund, you might be duplicating your bets with this one.
- Review your investment horizon. If you need this money for a house or wedding in 2027, stay away—the "Very High Risk" label means a bad six months could eat your capital right when you need it.
- Compare the Direct vs. Regular plans on your brokerage app to see exactly how much you're paying in commissions before committing.