Alpha generating flexi-cap funds

Flexi-cap funds offer investors the flexibility to invest across large, mid, and small-cap companies. But what if you could find a Flexi cap fund that consistently outperforms the market? This is where the concept of “alpha” comes in. Alpha refers to the return a fund generates beyond what’s expected from the market. Further ahead we’ll explore Alpha-generating Flexi cap funds and the measure of Sharpe ratio to gauge risk-adjusted returns they can potentially boost your portfolio’s returns.

There are only 9 flexi-cap fun that are generating positive alpha for the investors:

Data as of March 28, 2024.

What is Alpha?

Alpha is defined as the excess returns relative to the market benchmark for a certain level of risk assumed by the scheme. Alpha is undoubtedly the most important performance metric for a mutual fund scheme.

What is the Sharpe Ratio?

The Sharpe Ratio of a mutual fund indicates its prospective risk-adjusted returns. Risk-adjusted returns are the excess of an investment’s returns over those of any risk-free asset, such as a fixed deposit. However, higher returns signify an increased risk. A higher Sharpe Ratio indicates better returns from an investment, but at a higher risk level. As a result, it justifies the funds’ inherent volatility. Investors seeking larger returns will need to invest in funds with higher risk levels.

What is Quartile Ranking?

Quartile rankings assess how a mutual fund performs relative to others in its category. Rankings range from “Top Quartile” (highest returns) to “Bottom Quartile” (lowest returns). Funds are sorted by trailing returns over a chosen period. The top 25% are “Top Quartile,” the next 25% are “Upper Middle Quartile,” the next 25% are “Lower Middle Quartile,” and the lowest 25% are “Bottom Quartile.” Consistency across quarters is crucial.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.