Introduction
In the world of flexi-cap funds, JM Flexi Cap Fund has undergone a noteworthy transformation over the past two years. Growing from a modest ₹226 crore in assets under management (AUM) in 2022 to an impressive ₹4,531 crore today, this fund has captured the attention of investors across the market. But what lies behind this surge? Are returns solely responsible, or has the fund’s investment strategy experienced a major shift?
Here, we take a deep dive into the fund’s evolving approach, analyzing the key changes driving its turnaround performance and exploring whether this momentum is sustainable. For those seeking insight into the flexi-cap category, JM Flexi Cap Fund’s recent journey offers valuable perspectives.
What’s Fueling the Fund’s Outperformance?
JM Flexi Cap Fund's remarkable growth in recent years can be attributed to several strategic factors:
1. Flexible Market Cap Allocation
The fund’s unique strength is its flexible allocation across large, mid, and small-cap stocks. As of October 2024, JM Flexi Cap Fund holds 44.6% in large caps, 15.79% in mid caps, and 38.61% in small caps. This allocation allows it to adapt to varying market conditions, balancing stability from large caps with growth opportunities from mid- and small-cap stocks.
2. Sector-Focused Investments
Another driver of outperformance is its strategic allocation across high-potential sectors. Currently, the fund has a strong concentration in financials (18.79%), services (12.71%), capital goods (9.62%), and healthcare (9.21%). These sectors align with long-term growth trends, particularly as the Indian economy evolves, and the fund’s flexibility enables it to shift sector exposures based on market conditions.
3. Selective Stock Picking for Quality and Growth
The fund has also benefited from focused stock picking. Top holdings include HDFC Bank Ltd. (6.46%), ICICI Bank Ltd. (4.41%), Infosys Ltd. (3.72%), and Larsen & Toubro Ltd. (3.04%). This selective focus on companies with solid fundamentals and growth prospects has helped JM Flexi Cap Fund to capture high returns, especially over longer investment horizons.
4. Enhanced Portfolio Structure
The fund’s portfolio comprises 63 stocks, with the top 10 holdings accounting for 33.34% of the portfolio, ensuring a balance between diversification and focus on high-conviction bets. The portfolio's valuation metrics, including a price-to-earnings (P/E) ratio of 28.66 and price-to-book (P/B) ratio of 3.97, reflect a thoughtful blend of growth potential with relative value.
Fund Overview
- Expense Ratio: 0.42% as of Sep 30, 2024
- Exit Load: 1.0%
- AUM: ₹4,531 Crores
- Lock-in Period: None
- Age: 11 years, 9 months (since Jan 01, 2013)
- Benchmark: BSE 500 TRI
- Minimum Investment: SIP ₹500 & Lump sum ₹1,000
- Risk Level: Very High
- Short-Term Capital Gains (STCG): Taxed at 20% if redeemed before 1 year
- Long-Term Capital Gains (LTCG): After 1 year, tax is 12.5% on returns above ₹1.25 lakh per financial year
Trailing Returns (as of Oct 30, 2024)
| Period |
JM Flexi Cap Fund |
Category Average |
| 1 month |
-4.39% |
-4.98% |
| 3 months |
-3.14% |
-0.61% |
| 6 months |
13.56% |
12.17% |
| 1 year |
56.85% |
39.89% |
| 3 years |
27.03% |
16.6% |
| 5 years |
25.68% |
20.93% |
| 10 years |
19.18% |
15.82% |
JM Flexi Cap’s returns over the past decade illustrate its consistent ability to outperform the category average across multiple periods, showcasing its robust approach to capital growth in both the short and long term.
Portfolio Composition
Portfolio Analysis
The fund’s structure reflects a concentrated yet diversified approach:
- Number of Stocks: 63
- Top 10 Stocks (% of Portfolio): 33.34%
- Portfolio P/E Ratio: 28.66
- Portfolio P/B Ratio: 3.97
Compared to the category, JM Flexi Cap maintains a higher allocation to small-cap stocks (39.00% vs. category average of 20.32%), capturing growth potential while balancing it with stability from large caps.
Peer Comparison
| Fund Name |
AUM |
Fund Age |
Expense Ratio |
| JM Flexi Cap Fund |
₹4,531 Cr |
11 yrs 9 m |
0.42% |
| Parag Parikh Flexi Cap Fund |
₹82,441 Cr |
11 yrs 5 m |
0.63% |
| HDFC Flexi Cap Fund |
₹66,225 Cr |
11 yrs 9 m |
0.77% |
| Quant Flexi Cap Fund |
₹7,912 Cr |
11 yrs 9 m |
0.59% |
| Union Flexi Cap Fund |
₹2,355 Cr |
11 yrs 9 m |
0.87% |
JM Flexi Cap Fund’s relatively lower expense ratio (0.42%) and AUM growth underscore its efficient management and cost-effectiveness compared to larger peers, enhancing net returns for investors.
Conclusion
The transformation of JM Flexi Cap Fund over the past two years demonstrates the impact of a well-strategized, flexible approach in the flexi-cap space. Its dynamic asset allocation, selective stock picking, and cost-effective structure have contributed to significant AUM growth and strong performance metrics. As it continues to build on this momentum, JM Flexi Cap Fund presents a compelling option for those seeking adaptable, long-term growth with an eye on sectoral and market cap opportunities.
For investors evaluating their next flexi-cap investment, JM Flexi Cap Fund offers an attractive balance of growth and flexibility—an option that could be a valuable addition to a well-diversified portfolio.
Discalimer!
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