When it comes to mutual fund investing, most investors chase returns and often overlook one critical factor, i.e. expense ratio. A lower expense ratio means more of your money stays invested and compounds over time. Even a small difference of 0.5%–1% annually can significantly impact long-term wealth.
In 2026, cost-conscious investing is gaining traction, especially in flexi cap funds where fund managers actively shift allocations across large, mid and small-cap stocks. Against this backdrop, here’s a look at five of the cheapest flexi cap funds (direct plans) that combine low cost with performance potential:
Edelweiss Flexi Cap Fund – Direct Plan – Growth (Expense ratio: 0.46%)
Nippon India Flexi Cap Fund – Direct Plan – Growth (Expense ratio: 0.46%)
Mirae Asset Flexi Cap Fund – Direct Plan – Growth (Expense Ratio 0.51%)
Kotak Flexicap Fund – Direct Plan – Growth (Expense Ratio 0.59%)
Tata Flexi Cap Fund (Expense Ratio 0.59%)
Flexi cap funds see strong inflows amid market volatility
Flexi cap funds have emerged as a favourite among investors navigating uncertain markets. According to Association of Mutual Funds in India (AMFI), the category attracted over Rs 79,000 crore in FY26, making it the top-performing equity segment in terms of inflows. The segment saw consistent monthly inflows, with a record Rs 10,054 crore in March 2026 alone, as investors preferred the flexibility these funds offer.
1. Edelweiss Flexi Cap Fund
Performance snapshot:
1-year: 8.64%
5-year: 18.04%
10-year: 16.61%
Edelweiss Flexi Cap Fund stands out for its consistent performance. The fund has constantly outperformed its benchmark and the category over the past 10 years, highlighting its ability to generate wealth across cycles.
Its risk-adjusted performance is also strong, with a Sharpe ratio of 0.72 and positive alpha of 3.48, indicating efficient returns and consistent outperformance.
Portfolio strategy:
The fund maintains a diversified portfolio with a strong tilt towards financials like HDFC Bank and ICICI Bank, alongside core economy plays such as Reliance Industries and Larsen & Toubro.
2. Nippon India Flexi Cap Fund
Performance snapshot:
1-year: 5.84%
3-year: 17.72%
Nippon India Flexi Cap Fund is a relatively new fund launched in 2021 but has quickly scaled up to over Rs 8,000 crore in assets. Its performance has largely tracked the benchmark, though slightly outperforming. It however underperformed the category. Overall, it has offered stable and predictable returns rather than aggressive outperformance.
Risk metrics such as a beta of 0.98 and modest alpha of 0.73 indicate that the fund closely mirrors market movements.
Portfolio strategy:
The fund has a clear bias towards financial stocks, with top holdings including HDFC Bank, ICICI Bank, and Axis Bank, complemented by exposure to industrials and consumption plays.
3. Mirae Asset Flexi Cap Fund
Performance snapshot:
1-year: 10.38%
3-year: 18.21%
Launched in 2023, Mirae Asset Flexi Cap Fund has delivered strong early performance. It has outperformed both its benchmark and category in the short and medium term of 3 years, indicating effective stock selection and asset allocation.
With a Sharpe ratio of 0.62 and alpha of 1.90, the fund has shown a good balance between risk and return, despite its limited track record.
Portfolio strategy:
The fund follows a diversified yet financial-heavy approach, with key holdings in State Bank of India, Infosys, and Bharti Airtel.
4. Kotak Flexicap Fund
Performance snapshot:
1-year: 9.09%
5-year: 15.37%
10-year: 15.33%
Kotak Flexicap Fund, from Kotak Mahindra Mutual Fund, is one of the most established funds in this category. Its consistent performance across 1, 5, and 10-year horizons makes it a reliable option for long-term investors.
With a beta of 0.95 and steady risk metrics, the fund offers slightly lower volatility while maintaining competitive returns.
Portfolio strategy:
The portfolio combines financials with industrial and defence exposure, including names like Bharat Electronics and Jindal Steel and Power.
5. Tata Flexi Cap Fund
Performance snapshot:
1-year: 3.75%
3-year: 17.91%
5-year: 14.24%
Tata Flexi Cap Fund, managed by Tata Mutual Fund, has lagged peers in the short term but shows signs of recovery over longer horizons. Its three and five-year performance is competitive, even though recent returns remain under pressure.
Interestingly, the fund has relatively lower volatility (beta 0.87) and a strong alpha of 2.11, indicating potential for future outperformance.
Portfolio strategy:
The fund follows a diversified approach with a strong financial bias, complemented by exposure to consumption and infrastructure through stocks like Maruti Suzuki and ITC.
What should investors keep in mind?
While low expense ratio and past returns are important, they should not be the only criteria when selecting mutual funds:
-Past returns do not guarantee future performance
-Look at consistency across market cycles
-Evaluate fund manager strategy and track record
-Check risk-adjusted returns (Sharpe, alpha, beta)
-Ensure alignment with your financial goals and time horizon
Final takeaway
Low-cost flexi cap funds can be powerful wealth creators, especially in volatile markets where flexibility matters. However, the best fund isn’t just the cheapest—it’s the one that balances cost, consistency, and risk effectively.
Disclaimer:
This article is for informational purposes only and should not be considered investment advice. Mutual fund investments are subject to market risks. Past performance is not indicative of future returns. Investors are advised to consult a financial advisor before making investment decisions.