The markets have turned volatile even as they stay near all-time highs. Valuation concerns, especially in the mid and small-cap spaces, mean that a careful approach is needed from investors. As large caps rebound from their relative underperformance prior to 2023, their inclusion in any portfolio remains important. With new listings, newer opportunities are emerging in the mid and small-cap segments.

Therefore, a flexicap approach with a tilt to large caps would suit investors with a reasonable risk appetite.

JM Flexicap, with a track record of over 15 years, can be a good addition to your portfolio as the fund has delivered strong and consistent performance over the past 10 years.

The systematic investment plan (SIP) route may be ideal for targeted savings towards specific life goals. Investors need to have a time horizon of 7-10 years while taking exposure to the fund.

Robust performance

JM Flexi Cap has been a top-quartile performer over the past 7-10 years. The fund was earlier functioning with a multi-cap mandate and shifted to the flexicap category after market-regulator SEBI’s new norms emerged.

Over the past 10-year, 5-year and 3-year periods, the fund has delivered 22.1 per cent, 24.1 per cent and 26.7 per cent, respectively, on a point-to-point basis. This performance places it among the top few funds in the category.

When five-year rolling returns over the past 11 years (Feb 2013- Feb 2024) are considered, JM Flexicap has delivered mean returns of 15.4 per cent. This performance is higher than that of UTI Flexi Cap, Aditya Birla SL Flexi Cap and DSP Flexi Cap.

Also, in the 11-year period mentioned above, on a five-year rolling basis, JM Flexicap has beaten its benchmark, the S&P BSE 500 TRI, nearly 91 per cent of the time. It has delivered more than 15 per cent nearly 53 per cent of time over this period and more than 12 per cent nearly 80 per cent of the time.

The fund’s SIP returns (XIRR) over the past ten years are fairly robust at 20.8 per cent. A SIP in its benchmark S&P BSE 500 TRI would have returned 16.5 per cent over this period.

All return figures pertain to the direct plan of JM Flexicap.

The fund has an upside capture ratio of nearly 111, indicating that it rises more than the benchmark during rallies, while a downside capture ratio of 78.4 suggests that it falls less than the index during corrections.

Blended approach

JM Flexicap had a large-cap bias till recent times, with over 70 per cent invested in such stocks. However, over the past year or so, the fund has expanded focus on mid and small cap stocks. In its recent December portfolio, the fund has about 51.3 per cent in large caps, about 17 per cent in mid-caps and 26.8 per cent in small caps. The scheme has thus been able to participate in the broader market rally of the past few years.

In terms of style, JM Flexicap combines a blend of value, growth and momentum picks. Banks and financial services companies have always been the top sector held by the fund, though the proportion in the portfolio has declined over the past year or so. From HDFC Bank, Axis Bank and Bajaj Finance, which were the key picks previously from the space, the fund now has Bank of Baroda, SBI and ICICI Bank. JM Flexicap was early to latch on to the IT sector post-COVID as the segment rallied well till late 2021. The fund quickly pared stakes from the segment as valuations and growth outlook raised concerns. FMCG was another segment where the fund had reduced exposure as the segment experienced weak volume growth due to slowing rural demand.

It upped stakes in capital goods, automobiles and auto components, as well as power sector stocks, to make the most of their rally in recent years. So, stocks such as NTPC, L&T, Tata Motors and Hero Motocorp that rallied smartly in the last year aided performance.

The fund takes a diffused approach to stocks and sectors. Barring the top sector, all others account for less than 10 per cent of the portfolio, while individual stocks, barring a top few, account for less than 5 per cent of the overall holdings.

Overall, the fund would be suitable for those looking for healthy long-term returns with an above-average risk appetite. The SIP route would be the best mode of taking exposure.