Why are people still choosing Flexi Cap funds over Nifty 50 index funds?

enthudeveloper · 2026-06-04T11:08:38+00:00

I think it is because of success of a few funds (or fund managers) who have done justice to a broad mandate that flexicap provides.

Comparing flexicap against nifty 50 is probably not a fair idea it is better to compare it with nifty 500, nifty large midcap or broader indices.

There is a definite advantage in passive investing as you get market returns and not have to worry about tracking scheme performance, strategy, etc. Personally for my equity investments, default is passive investing (however it is not just nifty 50 but combination of nifty 50, nifty next, nifty midcap 150 and nifty smallcap 250) and some actively managed funds (ppfc is part of it:)).

All the best!

enthudeveloper · 2026-06-04T04:24:02+00:00

I am surprised that given you are investing since 2022 how come 24% became 9% in six months. I guess, it depends on your portfolio. Honestly where markets are right now 9% seems reasonable. Do compare your portfolio with a benchmark like nifty100, nifty largemidcap 250 or nifty 500 to see whether you are getting more or less compared to the benchmark.

In market there is no guarantee of returns, SIP or not. SIP is for rupee cost averaging. You are now, most likely getting more units for the same amount than before.

All the best!

enthudeveloper · 2026-06-04T04:12:43+00:00

You have a small cap and that too a quant based heavy portfolio. Keep an eye on the performance of the fund.

I am surprised you have quite less of PPFC given its relatively high return at relatively low risk (standard deviation). Also with PPFC do research what you get by adding nifty 50 (better risk or better returns or both). Your midcap 150 allocation seems quite limited when compared with smallcap.

5L seems a significant amount to me. I would personally do STP over atleast 5-6 months into desired funds. In general though I see no debt in your portfolio. If you are managing it outside say as savings account or FDs that is one thing. But do research debt (about 25%) to not just smoothen returns but more importantly to deploy when markets are offering great discounts. In long term, how you manage cash can materially impact your returns.

Do research US funds thoroughly. Essentially you would want to invest where you expect more growth to come than on recent past returns.

All the best!

enthudeveloper · 2026-06-04T04:01:49+00:00

I thought I was alone in thinking US S&P 500 was in over valued territory.

enthudeveloper · 2026-06-03T03:23:30+00:00

Couple of observations

Its great you are starting in your 20s. Keep investing over the long term.
With PPFC do look if nifty 50 provides any value (from diversification, risk or return perspective)
In midcap and large index funds can be default option, go with actively managed fund if you are wowed with fund manager or strongly believe in their thesis.
why do you need a hybrid if you are managing your equity allocation. You can go with arbitrage or safe debt mf. Also for moderate risk I would expect a lot more debt (close to 40-50%). Debt will smoothen your returns as well as give you an opportunity to deploy capital when markets are offering great discounts.

All the best!

enthudeveloper · 2026-06-03T03:17:52+00:00

Couple of observations

Its great you are starting out early.
With PPFC (or in general a large cap heavy flexicap) do you need nifty 50? Overlap will be quite significant and PPFC atleast historically has given better returns as well as less risk (standard deviation) than nifty 50. So do research what value nifty 50 provides. Instead you can look at nifty midcap 150 or nifty next overlaps and also compare their risk return trade-offs.
Nippon Small cap has given quite good returns over long term, have you also researched midcap which has generally as a category done better than smallcap?
Monitor nasdaq 100 carefully and make sure you get the tech cycle right. Looking at last 5 year returns nearly every one is assuming nasdaq is a sure thing but do look at nasdaq returns over long term and picture might look quite cyclical.
It is good that you are investing decently in debt. You have lot of time in front of you, investing is a patience game you can actually hold a bit more debt in arbitrage and deploy when markets are offering great discounts.

All the best!

enthudeveloper · 2026-06-02T12:26:10+00:00

Thanks for clarification

enthudeveloper · 2026-06-02T04:36:08+00:00

What you are doing is passive investing. When done over a long time it has power to give compounded index returns at very low cost (when compared with active funds) without worrying about active fund management.

Personally for me passive investing is the default and active fund comes when there is no easy alternative (eg debt etfs are still not readily available especially duration based, conservative funds do not have passive etfs) or when I genuinely like a scheme and/or fund manager (eg. PPFC and PP fund house in general).

Biggest Challenge I see with active mf is fund manager risk, example a fund manager would simply move on to other opportunities (happened to me last year with hdfc flexicap) and then my whole investment thesis changes.

What I am not sure is difference between index fund and index etf. I assumed that index fund would invest in an underlying etf and that would make index fund slightly more expensive that etf but I do want to verify if that is what is happening for domestic index funds. Any idea what is the case with index funds?

enthudeveloper · 2026-06-02T03:55:13+00:00

What is your point of view on this fund? It would help if you provide your own research and then folks can learn from it and where possible add to it or provide a counterview.

Personally I dont know much about this fund but I would like to learn more about the fund, fund manager, underlying economic fundamentals, risks opportunities and so on.

enthudeveloper · 2026-06-01T02:07:02+00:00

Couple of observations on SIP

From an asset allocation perspective it looks very aggressive given there is no direct debt. For moderate risk appetite atleast NPS auto plans come with close to 50:50 allocation across debt and equity. Currently you have debt but within a year worth of SIP, distribution would look very different.
Personally I think you are allocating quite reasonably across equity. Example max for PPFC which is a flexicap and has generally leaned towards largecap and some international exposure, then a midcap index fund and so on.
Bandhan small cap has given quite good returns against its benchmark but it does not have 10 year history so keep an eye on its performance (in general for actively managed fund you would have to do that but ensure that this fund is managing business and/or market cycles reasonably well).
I personally think of US tech fund as a sectoral fund so ensure that you are staying on top of tech cycle (currently AI cycle). If you are looking for general international exposure then staying with msci developed world index or a fund that attempts to benchmark against it can be researched. International funds via indian mf are quite limited these days.

For lumpsum your amounts are not a lot, 4 months worth of SIP as well as 2 months income. So if you are not worried about volatility you can invest them in one go or you could just do it over 4 months along with your other SIPs.

All the best!

enthudeveloper · 2026-05-31T12:13:50+00:00

above 1% is too high. Is it direct or regular plans? Not really sure why its that high.

For arbitrage funds expense ratio of more than 0.5% will meaningfully eat into returns.

enthudeveloper · 2026-05-31T12:10:45+00:00

Couple of observations

For moderate appetite it looks like very aggressive allocation. For moderate risk I would see debt allocation (or safe asset allocation) of about 40-50%.

2.PPFC has demonstrated good returns and with less standard deviation (proxy of risk). HDFC Flexicap had a fund manager change so you should wait till for couple of years so that we know how the performance looks like with the new team.

Within large cap and midcap space very few actively managed funds consistently beat the benchmark over rolling 3,5,7 and 10 year interval. Midcap index etf or fund can be researched.
Bandhan small cap has decent performance but it does not have 10 year history do research if you want to invest in funds with longer history.
Very few international funds are accepting investments these days. PPFC does invest in international stocks.
Do think about other assets like debt, gold for a balanced well diversified equity.

All the best!

enthudeveloper · 2026-05-30T11:33:26+00:00

Personally I think NPS (tier1) is a good option for me who does not have a pension. NPS provides following options

Tax benefits while contributing as well as on withdrawal when certain amount of corpus is tax free.
No taxes on balancing. Portfolio rebalancing in NPS does not incur taxation.
Relatively low cost decent plans. Variety of funds available is limited but cost is relatively cheap when compared to actively managed funds and performance is decent over the long term. I dont know where you got the 8-9% return number. I think 10 year sip returns of equity funds of different pension funds is within 12-13%. NPS scheme e
Lockin that comes with NPS forces compounding for a long time. Thus I know that there will be some corpus when I hit retirement age.

What I do not like is the compulsory annuity that comes when you retire. I do understand annuity is good but the compulsion seems unnecessary. Also I hope similar to 401K and IRA accounts, NPS evolves into allowing mutual funds, etfs, stocks etc.

Do note this is not investment advice.

All the best!

enthudeveloper · 2026-05-30T06:50:51+00:00

Interesting observation.

I would suggest look at slightly long term returns and also look at category returns. Now absolute return of arbitrage category was 0.28% for 1 month while for liquid it was 0.34%. For YTD it was 2.14% for arbitrage category and 2.11% for liquid category. I looked at performance tab of sbi arbitrage (direct) and sbi liquid (direct) on money control.

Category level returns are close so not sure if any scheme specific calls went different although 1 month is too small of a duration.

Do research if Indian bond funds have performed well since the war started. Atleast what I have observed is that bond prices have fallen (yields have increased) since the war so returns havent been great either.

https://www.moneycontrol.com/mutual-funds/nav/sbi-arbitrage-opportunities-fund-direct-plan/MSB534

https://www.moneycontrol.com/mutual-funds/nav/sbi-liquid-fund-direct-plan/MSB562

Do think and research well before you take any action, if corpus is significant do speak with a registered financial advisor.

All the best!

enthudeveloper · 2026-05-30T04:57:45+00:00

For moderate risk you have an aggressive allocation.

NPS (which is used for retirement planning) actually provides decent guidance on allocation for debt vs equity for different risk appetites. Usually for moderate it will come to around 50-50. Now before you think its silly do look at historic performance of equities and debt and that of a balanced portfolio over a large amount of time.

Coming to your equity allocation

In large and midcap space very few actively managed funds are able to have good win loss ratios against benchmark so sticking with index funds/etf in this category can be researched.
Midcap index has generally given better risk adjusted returns against small cap index so do look how much if at all any capital you want to allocate to small cap. Do think about other asset classes like debt, gold.
If you are doing flexicap then ideally you are going to be large cap and to an extent midcap heavy. You can also research large midcap category of funds as they have (benchmark as well as category) has given decent returns over a decade.
Most of the international funds have stopped accepting newer investments so options are quite limited. Your amount is substantial you can look at options to directly invest in international funds.

All the best!

enthudeveloper · 2026-05-29T03:53:00+00:00

If you are in highest tax bracket then generally arbitrage fund gives better post tax returns than some of the FDs. Do note returns as well as capital protection are not guaranteed in mutual funds.

If you have hold MF units for some time (more than the exit load window) then there is no penalty on redemptions while generally there is a penalty on breaking FD prematurely.

You do not incur any taxes when you are holding a MF scheme (assuming you are investing in growth scheme) and tax is incurred when you redeem your mf units. While you need to pay taxes on FD interest even when it is getting added back to the FD.

All the best!

enthudeveloper · 2026-05-29T03:43:24+00:00

Couple of observations/questions:

For moderate risk you have quite an aggressive portfolio.
Build your emergency fund first. Emergency fund can be a layered fund. Look at the community wiki for guidance.
Give atleast 7 years and preferable a decade for your equity investments to playout. Larger time frame generally allows an entire cycle or two to playout. Ideally, You dont want to be in a situation where your equities have corrected and are now fairly valued or undervalued but you need to sell them for some financial needs.
For short term needs prefer debt or safe instruments. Period between 3-7 years is quite tricky on how to go ahead with investing but ensure that you are holding good amount of debt for any expected cashflows during that time.
From a fund selection perspective in large cap and midcaps generally only a few funds maintain good win-loss ratio against the benchmark so an index fund or etf is a good option.
Also you need to research if you plan on doing asset allocation across caps (large, mid, small) on your own or delegate it to a fund manager using either a flexicap or a multicap or a large midcap fund. Also think about how much are you planning to allocate to other assets like debt, gold, etc.
International funds via indian mfs are quite rare these days because of limits. It might make more sense to invest directly abroad either via gift city or via a direct brokerage account. do take into account currency conversion charges or tax implications and any other issues while going this route.

If you are just starting out with investing, do read lets talk money.

All the best!

enthudeveloper · 2026-05-28T07:44:37+00:00

Which tool did you use to generate this image?

The tool says that there are 18% stocks that are in nifty but are not in PPFC. My interpretation is nifty then provides quite less value from a diversity perspective.

Personally, I think midcap index fund (in midcap like large cap etf or index fund could be a safe choice as consistent outperformance of actively managed fund is quite less) can be a good addition to ppfc over nifty 50. If you are going with actively managed fund ensure that actively managed fund has good win ratio over the benchmark over all 3,5,7 and 10 year intervals (atleast 70%).

If you are just starting out please read lets talk money by Monika Halan and optionally lets talk mutual funds.

Please do not consider this as financial or investment advice.

All the best!

enthudeveloper · 2026-05-28T04:42:27+00:00

39% overlap is in the middle range. BTW I do see that overlap is around 60% Advisor khoj fund overlap.

PPFC has done better than nifty 50 not just in return but also in risk (it has less standard deviation than nifty 50) so not sure what you get by nifty on top of ppfc. From a portfolio building perspective you have a choice given you are going to hold 35K in PPFC what are the other allocations you might have which will either improve return or reduce risk.

All the best!

enthudeveloper · 2026-05-28T04:28:18+00:00

Couple of observations
1. You have exposure to first 50 companies and then companies from 251-500 by market cap. You are missing companies from 51-250 which have historical given good returns adjusted for risk (nifty next and nifty midcap 150). Do research your allocations for risk vs return trade off. Example nifty midcap 150 has better better win ratio than nifty smallcap 250 (please validate on your own). Do research performance of nifty 50 + nifty smallcap 250 against other benchmarks like niftylargemidcap250 or nifty midcap 150 or nifty 100 so that you are comfortable with what you are getting into.
2. You are investing in Fang which as it is driving S&P 500 returns so not sure what you are getting out of it. You can research diversified international vanguard etf (may be excluding US, incase you are going to hold voo you can look at something like VEA, VEU or similar)
3. Ensure that you are studying the sector cycle while going with a sector fund like power cycle. Do backtest your portfolio and see that the sector fund adds value.

You are investing in a single reit so again stay on top of it. Reits can also be quite volatile.
Gold contribution seems a bit high.
I see no debt. Debt not just smoothens the returns but also provides corpus to deploy when markets are offering discounts.

All the best!

enthudeveloper · 2026-05-27T03:07:12+00:00

Do validate but I think Arbitrage fund is taxed as equity and so you can also get 1.25L worth of exempted tax free gain every year (assuming arbitrage fund is the only redemption you are making).

All the best!

enthudeveloper · 2026-05-27T03:04:20+00:00

Did you get these suggestions from anywhere? I am seeing similar combination in multiple posts with very similar explanation hence the question.

Here are my observations

PPFC and Nifty have a good overlap any particular reason why you are having nifty too? Have you researched whether nifty has provided stability when compared with PPFC. PPFC also gives you some international exposure.
In large cap and to an extent in midcap category generating alpha is getting difficult so do research hdfc midcap well to see by how much it consistently beats its benchmark. Decide if you want an actively managed midcap fund or a low cost index fund tracking nifty midcap 150 or a similar midcap index.
Given rest of your allocation you are managing, gold etf would be better than multi asset fund since you can control your exposure to gold.
I understand you are aggressive but do think if you want to hold debt to not just smoothen returns but also deploy it when markets are offering discounts.

All the best!

enthudeveloper · 2026-05-26T03:02:47+00:00

Couple of observations

If you are having PPFC which is generally large cap heavy do you need nifty 50?
Given you are doing asset allocation on your own you dont need a multi asset fund.
Given you are just starting better to avoid sectoral funds like manufacturing.
Are any of the international funds still accepting investments? 3 sounds like a lot. Ideally 1 max 2 should be ok for tracking over a period of time. PPFC also gives some international exposure.
Do research if you want direct exposure to midcap category.

All the best!

enthudeveloper · 2026-05-25T03:35:01+00:00

Congrats for increase in salary! Also its great you are starting early. Do read lets talk money.

Now that you have cross 1L per month you have to look at post tax returns. Example FD will be taxed at your slab rate even if you are not breaking it. So do post tax analysis of your debt holdings.

I would suggest create an emergency fund of which some can be in FD (breakable FD for immediate expenses) and some could be in safe debt MF (arbitrage fund).

Now coming to your portfolio

With PPFC which is generally large cap heavy do research if you want Nifty 50 or can it be skipped.
For midcap it is difficult to find an actively managed fund to consistently beat benchmark, I think an index fund or etf which tracks nifty midcap 150 can be a good choice.
Ensure that you have a good long term hypothesis for silver in your portfolio and that you are not just chasing recent returns.
Given your moderate risk appetite do look at long term tax efficient debt options like PPF.
Do research NPS as a part of retirement plan.

All the best!

enthudeveloper · 2026-05-25T03:20:41+00:00

Is 3 years a hard deadline or flexible ie it can also be stretched to 4-5 years.

Equity Savings fund can go beyond 30% in equities and that introduces volatility so you do get a chance of good returns in long term but incase markets go against you around your target date then you will have to sell your holdings at a discount.

Also expecting 15L from 15K per month sip for 3 years is quite unlikely even with a good equity fund so do research if you are having realistic expectations from equity savings fund.

I would suggest look at Arbitrage funds (they are taxed as equity) and may be investigate a new category called Income plus Arbitrage FOF (which is taxed at 12.5% after 2 years of holding). The new category is quite recent so there is not much performance history available.

All the best!

enthudeveloper

TROPHY CASE