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

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

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.

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

Methodology / Framework for Fund Selection

Universe Selection: Start with all Flexi Cap mutual funds (117 funds in the category).
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%.
Result: After filtering, 7 funds remain as top Flexi Cap candidates.
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.

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.

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).

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.

Presenter

Sanjay Kathuria

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.