Why are investors ignoring a top flexi-cap of last 5 years?

Summary: This flexi-cap fund has topped the charts over the last five years, outpacing its benchmark by more than 5 per cent. Yet, its size has shrunk in the past 12 months. Why? Have investors simply overlooked the fund, or is there a deeper story? Let’s find out. The Quant fund house has seen better days. And its flexi-cap fund is no different. Once the poster child of India’s equity fund industry, the Quant Flexi Cap Fund is suddenly finding itself out of favour. The fall from grace has been swift. Between 2020 and 2024, the fund grew an astonishing 1,796 times in size, fuelled by a blistering performance streak where it delivered over 30 per cent annualised returns, comfortably topping its category. But the tables have turned in the last 12-odd months. The fund’s size has shrunk, investors are heading for the exit, and its performance has slumped — down nearly 12 per cent in the last 12 months, making it one of the category’s worst performers this year. So, what gives? Is Quant Flexi Cap’s success story over? Or is this just another bump in a longer road? A short-term lens is dangerous First, let’s address the obvious. One-year returns are a poor yardstick for evaluating equity mutual funds. If you judge an equity fund based on 12-month performance, you’re setting yourself up for disappointment. At Value Research, we’ve always emphasised that equity investing requires a five-year (at least) time horizon. Anything less, and you’re better off in hybrids or debt. That’s because equity markets move in cycles, and funds that look weak in one year can often emerge stronger over a full market cycle tha