Largecap vs Broader Market: Flexicap Fund Managers Diverge on Allocation Strategies Amid Bottom-Up Stock Selection

Flexicap funds are showcasing varied allocation strategies, with some fund managers leaning towards largecap stocks while others are finding value in mid and smallcap segments.  

This divergence is driven by bottom-up stock selection rather than top-down market segment predictions. 

Allocation Trends in Flexicap Funds 

As of March-end, 22 out of 39 flexicap funds have increased their largecap exposure compared to March 2025, according to Prime Database.  

In contrast, 17 funds have opted to boost their allocations in mid and smallcap stocks. This trend highlights the flexibility that flexicap funds offer in navigating different market capitalisation segments. 

Funds from Samco, 360 One, and Motilal Oswal have notably increased their largecap allocations.  

Meanwhile, Aditya Birla Sun Life, Axis, and Quant Mutual Funds have reduced their largecap exposure, favouring mid and smallcap stocks. 

Factors Influencing Allocation Decisions 

Fund managers attribute these allocation shifts to evolving opportunities in various sectors. 

Harish Krishnan from Aditya Birla Sun Life Asset Management Company notes that sectors like IT services, insurance, banking, chemicals, and retail are presenting attractive opportunities in mid and smallcap companies. 

Sachin Relekar from Axis Mutual Fund explains that their fund's mcap mix is a result of bottom-up stock selection, focusing on reducing high-risk companies and increasing allocations to valuation-attractive segments. 

Read More: HDFC, ICICI, Parag Parikh, Mirae: Do India's Top Flexi-Cap Mutual Funds Share More Than Just Their Objective? 

Momentum in Largecap Stocks 

Samco Mutual Fund has increased its largecap exposure by nearly 25 percentage points over the past year. CEO Viraj Gandhi attributes this to stronger momentum in largecap stocks compared to mid and smallcap segments during the period from March 2025 to March 2026. 

Conclusion 

The allocation strategies of flexicap funds reflect a diverse approach to market opportunities, with some funds favouring largecap stocks due to momentum factors, while others see value in mid and smallcap sectors. These decisions are primarily driven by bottom-up stock selection and sector-specific opportunities. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.