Mutual Fund Calculator: SIP of Rs 1,000 in HDFC Flexi Cap Fund returned Rs 1.27 crore

Investing as low as Rs 1,000 monthly in this Flexi-cap fund might have made you crorepati. Looking for profitable experience in mutual funds? Continue reading.

The conventional asset allocation method is like sheet music. It is prescribed, it has right answers and wrong answers and it sounds about the same every time. But jamming is different. Jamming is when you make music. When you improvise and adapt to conditions. When you are creative. – John Kao 

Striking the right balance between aggressive and conservative bets helps to have the best of both worlds. No! Here I am not talking about Hybrid Funds, but flexi-cap funds. By definition, flexi-cap funds are free to invest across market capitalisation.  

Psst! It is the glorified version of Large-Cap funds. 

After changing the guidelines of how the multi-cap funds can operate, speculations regarding its impact on the stock market took birth. However, all the speculations were in the bin when the Securities and Exchange Board of India (SEBI) announced the new category called flexi-cap fund. 

HDFC Flexi-Cap Fund was launched in the year 1995. This fund enjoys an asset under management (AUM) of Rs 32,155 crore, one of the highest in the category. It has generated compounded annual growth rate (CAGR) of 18.45 per cent since its inception. 

The above image shows the performance of HDFC Flexi Cap Fund as against S&P BSE 500 Total Returns Index (TRI) and category average. If we go by the calendar year returns, then this fund does quite well during bull markets. 

In fact, since 2021 the performance of the fund has been quite good despite it following a growth investing style. In the year 2022, this fund has outperformed S&P BSE 500 TRI and category average by a huge margin. 

Investing in mutual funds via a systematic investment plan (SIP) is one of the tried and tested methods for long-term investing. But can they generate wealth over the long term? A monthly SIP of a mere Rs 1,000 in the HDFC Flexi Cap Fund would have generated Rs 1.27 crore in 28 years. This means an annualised SIP return of 20.75 per cent. 

Investment Strategy

Understanding the investment strategy of the fund helps to know how the fund manager builds the portfolio. In the case of HDFC Flexi Cap Fund, while selecting stocks across market capitalisation, the fund would seek for companies that are likely to achieve above-average growth, enjoy distinct competitive advantages, and have superior financial strength. 

Final Thoughts

Our analysis shows that this fund performs well during a bull run. However, with average 5-year rolling returns of 11.75 per cent over the past 10 years, this fund has outperformed its category (9.76 per cent). Moreover, our analysis also shows that SIP is one of the best tools available for investing in mutual funds. A gradual contribution in mutual funds helps create wealth in the long run and at the same time can be easier on pockets. However, one important thing to note here is that fund selection is important for successful investing in mutual funds.