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IDFC Flexi Cap has been challenged on multiple fronts. One area of concern has been frequent changes at its helm. Kenneth Andrade (June 2006-September 2015) and Aniruddha Naha (September 2015-March 2016) were its erstwhile managers. Anoop Bhaskar led this fund as primary manager from April 2016 until Kartik Mehta became its lead in April 2018, with Bhaskar playing second fiddle. Kartik exited the fund house on 20 Dec 2019, resulting in Bhaskar once again taking the lead here. In December 2020, the fund house hired Sachin Anandrao Relekar as Kartik’s replacement and appointed him comanager. Going ahead, we would like to observe how the team evolves here before gaining conviction on this fund. The strategy has also undergone a transformation. Earlier, the fund’s mandate was to identify companies that are niche, emerging, and different from the mainstream. As a result, it didn’t allow the manager to invest in conventional names, with predominantly mid- and small-cap companies making the grade. Bhaskar initially tried retaining this feature, but the lack of such opportunities and the fund’s increasing size made it difficult to execute effectively. Although this aspect continues to be a part of a now more conventional flexi-cap strategy, it is no longer its mainstay.Consequently, the portfolio structure underwent a change. Initially, with a higher mid- and small-cap exposure, the fund had been an outlier among peers, who typically had large-cap exposure of around 70%. Thus, it had a very differentiated risk/reward profile vis-à-vis its peers. Its portfolio was modified to add more large-cap names under Kartik’s supervision. The idea was to bring it closer to its peers and not expose investors to additional risk. In line with the same, the fund now resides in the newly launched flexi-cap Morningstar Category so as to retain its existing framework. That said, frequent changes at the helm and strategy has destabilised the fund in the past few years, thus adversely affecting its performance. Clearly, there is a task in hand for the managers to get the fund back to its winning ways. Until then, we assign it a Morningstar Analyst Rating of Neutral.
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