Given that markets are at new highs, a blended approach may be better to avoid mishaps with your portfolio. In this regard, flexi-cap funds may be better, given their non-rigid mandate which allows them to invest across market caps.

PGIM India Flexi Cap would fit as an investment avenue for the long term for those with an average risk appetite. The fund is among the best in its category and has consistently beaten its benchmark — Nifty 500 TRI — across time-frames.

Given the scheme’s healthy track-record, PGIM India Flexi Cap can be a key part of an investor’s portfolio for the long term.

The fund has used the flexi-cap mandate to its advantage and has not hesitated to increase stakes in mid- and small-caps ahead of peers, in the past, depending on the market situation. Large-caps still dominate the portfolio, though.

Investors with a time horizon of 7-10 years can consider the fund. The SIP (systematic investment plan) route can be taken for investments.

Robust track record

PGIM India Flexi Cap has a performance record that is quite healthy. On a rolling five-year returns basis from April 2015 to November 2022, the fund has beaten the Nifty 500 TRI all of the time. It has delivered an average five-year annual return of over 16 per cent in this period. These returns are higher than those delivered by Kotak Flexi Cap, Axis Flexi Cap and DSP Flexi Cap. It is only marginally lower than Parag Parikh Flexi Cap. Even on a point-to-point compound annual growth rate basis, the fund has beaten its benchmark and most peers across time-frames – three, five and seven years.

Though the fund did fall broadly in line with the markets in early 2020 (around 36 per cent), it recovered swiftly and delivered strongly in the subsequent market rally that lasted for over a year-and-a-half.

Straddling market caps

Till early 2020, PGIM India Flexi Cap used to hold more than 60 per cent of its portfolio in large-cap stocks. The rest was spread between mid- and small-caps. But after the fall in March 2020 and the subsequent market rally, the fund was able to make strong gains as it reduced large-caps to less than 50 per cent of the portfolio and increased exposure to stocks down the market-cap curve. Over the past several months when markets turned volatile, the scheme once again increased large-cap exposure to more than 60 per cent of the portfolio. In its earlier avatar as PGIM India Diversified Equity (before the flexi-cap category came into being in 2021), the scheme was large-cap oriented.

PGIM Flexi Cap appears to be following a strategy that may be classified as a blend of growth and value. It may also be said that it does not hesitate to take momentum/opportunistic calls.

For example, at the onset of the Covid-19 pandemic, the fund upped stakes in pharma and software stocks. It subsequently exited pharma. The scheme pared exposure to software stocks over the last one year, as valuations and recession concerns in the developed economies hurt the sector.

It has increased stakes in sectors such as automobiles, auto components, and capital goods as the domestic economy looks set to grow at 6-7 per cent despite global concerns and segments such as manufacturing are set to benefit.

The fund does not take concentrated exposures beyond the top few stocks in the portfolio. Individual stocks generally account for less than 5 per cent of the portfolio. Stocks from the Nifty 50 basket make up much of the top holdings in recent times. There is diversification down in the list, though.

PGIM Flexi Cap takes cash and debt positions mostly to the tune of 2-4 per cent of the portfolio, though it has gone over 6 per cent on a few occasions.

Overall, investors can consider the fund for above-average returns over the long term. They must, however, have a long horizon. Also, given that markets are at new highs, investors may have to tone down return expectations even from SIPs over the medium term.

comment COMMENT NOW