With assets of INR 5,532 bn, Flexi Cap continues to be the largest equity fund category in the Indian mutual fund industry. The appeal is obvious: Portfolio managers can invest in stocks from across the market cap spectrum, in an unrestrained manner.
The current environment—uncertainty coupled with volatility—is primed for Flexi Cap funds.
While investors have been busily investing in Flexi Cap funds, I thought it would be interesting to find out if portfolio managers share their enthusiasm.
Do portfolio managers invest in Flexi Cap funds they run?
When a portfolio manager invests substantial personal monies in funds he runs, he displays courage of conviction. It signals that the manager has faith in his investment skills, and that he is willing to take the same journey as investors in his funds.
For this analysis, I’ve considered the 10-largest Flexi Cap funds. Accounting for roughly 77% of the category’s assets, makes them a representative sample.
Some clarifications are in order:
1) To begin with, the disclosures only reveal the market value of investments made by portfolio managers, not the sums invested by them. To my mind, the latter is a far better indicator of the manager’s conviction.
2) Furthermore, the disclosures combine mandatory compensation-linked investments in the fund (as prescribed by market regulator SEBI) along with investments made by the portfolio manager on his own. This further muddles the picture.
3) Finally, the most recent disclosures are as of Sep. 2025.
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The findings are interesting…
1) About 31% of the category’s assets have attracted investments less than INR 10 mn from portfolio managers
2) One-third of assets enjoy investments of over INR 100 mn, thanks to a single investment team.
3) There is little correlation between the fund’s asset size and portfolio managers’ investments therein
4) The long-standing industry myth that only managers from leading fund companies (read large AUM) invest meaningfully in funds they run, is shattered
5) Finally, when it comes to ‘skin in the game’, the portfolio management team at the helm of Parag Parikh Flexi Cap towers head and shoulders above its peers
I hope SEBI tweaks disclosure norms to make them more granular, whereby the sums invested by portfolio managers are unambiguously disclosed.
Globally, portfolio managers treat ‘skin in the game’ as a badge of honour.
Hopefully, Indian portfolio managers will agree, and act in a like manner.
