360 ONE Flexicap Fund: Diversified approach to long term wealth creation

Market Context

The market is in a consolidation phase since the ceasefire post Operation Sindoor. Indian equities have shown strong resilience amidst global trade uncertainties and Moody’s downgrade of US Sovereign rating. Markets resilience stems from confidence in India’s domestic growth dynamics, stable macro-economic factors and accommodative monetary policy stance of the RBI. In current market conditions, a flexicap strategy may be suitable for investors looking for long term wealth creation and relative stability in their portfolios. In this article, we will review 360 ONE Flexicap Fund whose strong performance has caught our attention.

Why invest in Flexicap now?

• India is targeting a narrower fiscal deficit of 4.4% in FY 2026, with reduced Government borrowing. Inflation is cooling. Tax benefits announced in 2025 Union Budget (income up to Rs 12.75 lakhs except from income tax), rural consumption demand recovery and above normal monsoon forecast, front loading of Government spending in FY 2026 can lead to higher demand recovery.


• Lower crude prices and weakening dollar might provide a good base for the market recovery (see the graphic below). Repo rate cuts by the RBI are likely to provide legs to the market recovery.
  
  

  

  Source: Bloomberg, Advisorkhoj Research, as on 30^th April 2025



• The sharp correction in the market has brought valuations to reasonable levels across all market cap segments (see the graphic below). There may be attractive long term investment opportunities across market cap segments through a flexible strategy at current valuation levels.
  
  

  

  Source: NSE, Advisorkhoj Research, as on 30^th April 2025



• While the long term outlook for Indian equities is positive, global trade uncertainties and concerns about US Government borrowings can be headwinds in the near term. A flexicap strategy can be suitable in the current market conditions both from a short term and long term perspective because a flexicap fund manager has the flexibility to manage asset allocation depending on his / her outlook. In times of uncertainty or volatility, the fund manager can increase large cap allocations (large caps tend to be less volatile, see the drawdown chart below) and increase allocations to mid / small caps in different phases of market recover.
  
  

  

  Source: NSE, Advisorkhoj Research, as on 30^th April 2025



• Ideal for retail investors: Diversification across different market cap segments can reduce unsystematic risks and generate more consistent returns. Flexicap Funds are ideal for investors who are not able to decide how much allocations they should have towards each market cap segments and want the fund managers to decide on market cap allocation


• Tax efficiency: Flexicap funds are also tax efficient. If an individual investor rebalanced between different investments (large, mid or small cap) then such rebalancing would attract tax liabilities for the investor. Flexicap funds are tax efficient in the sense that any rebalancing or change in market cap allocations of the fund does not attract any tax liabilities in the hands of the investor.

360 ONE Flexicap Fund

The 360 ONE Flexicap fund in was launched in June 2023 after IIFL MF became 360 ONE MF. The investment strategy of 360 ONE Flexicap Fund is unique and has the potential of consistently generating alphas for investors over long investment horizons. The fund is managed by Fund manager Mr. Mayur Patel, and Co-Fund manager Mr. Ashish Ongari.

Rolling Returns: Fund Outperformance Vs Category

The chart below shows the 1 year rolling returns of the fund Vs its category since the inception of the scheme. Note that the fund has outperformed the category all through.

Source: Advisorkhoj research as on 20^th May 2025.

Better downside protection

The chart below shows the drawdowns that the 360 ONE Flexicap fund (regular growth) went through in the period since its inception compared to the broad market index. You can see that the fund had better support during the downsides than the benchmark.

Source: Advisorkhoj research as on 20^th May 2025.

Superior risk adjusted returns

Market capture ratio is a measure of the performance of a mutual fund scheme relative to its benchmark index in rising and falling markets. Up Market Capture Ratio tells us how much percentage of the market’s upside was captured by the fund, while Down Market Capture Ratio tells us how much percentage of the market’s downside was arrested by the fund. Up-Market Capture Ratio and Down-Market Capture ratio can give us a sense of risk adjusted returns. We looked at the market capture ratios of 360 ONE Flexicap Fund over the last 1 year.

The Up Market Capture Ratio of 360 ONE Flexicap Fund was 105% which implies that if the broad market index went up by 1% in a month, then the scheme’s Net Asset Value (NAV) went up by 1.05%. The Down Market Capture Ratio of the fund was 97% which implies that if the broad market index went down by 1% in a month, then the scheme’s Net Asset Value (NAV) went down by 0.97% only. In other words, 360 ONE Flexicap Fund not only beat the broad market index in when market was trending upwards, it was able to provide downside risk limitation to investors in market corrections. The market capture ratios of 360 ONE Flexicap Fund are a clear indication of the potential of the fund to give superior risk adjusted returns of the fund.

Investment Strategy of 360 ONE Flexicap Fund

360 ONE Flexicap Fund does not have any market cap bias. The fund manager employs bottom-up stock picking approach. The fund manager follows SCDV Framework along with internal (financial analysis, corporate governance checks, risk reward evaluation, etc) and external analysis (conferences, investor presentations, management interaction, primary visits across supply chain, etc) for stock selection.

SCDV Framework

In the SCDV Stocks are classified into 4 categories based on their PAT (Profit after Tax) growth and ROE (Return on Equity).

• Secular: Companies delivering high PAT and ROE growth rates, playing out India’s secular upward growth shift.


• Cyclicals: High growth companies which typically have high capital expenditures and hence a lower ROE. These have relatively higher sensitivity to business and economic cycles.


• Defensive: Companies that have high ROE and lower growth rates, low capital expenditures and sensitivity to business cycles, but that provide a cushion to returns during downturns.


• Value Traps: Companies that register low growth rates and ROE, which are typically avoided across public equity strategies.

Current portfolio positioning

Source:360 ONE, Advisorkhoj research as on 30^th April 2025

Market Cap Allocations

The chart below shows the market cap allocations of all the flexicap funds that have minimum 2-year track records. You can see that 360 ONE Flexi Cap Fund (in the purple box) has higher allocations to small cap and lesser allocation to midcap compared to category averages. This is a reasonable asset allocation strategy since small caps seem to be at more reasonably valuations compared to midcaps. The large cap allocations of the fund are slightly higher than category average, which seems prudent in current market conditions.

Source: Advisorkhoj research as on 30^th April 2025

Low overlap with other 360 ONE equity schemes

The chart below shows the portfolio overlaps between different 360 ONE MF equity mutual fund schemes. You can see that except the different equity funds generally have low portfolio overlaps. You can build your investment portfolio with multiple schemes from 360 ONE MF.

Source: Advisorkhoj research as on 30^th April 2025

Why invest in 360 ONE Flexicap Fund?

• Unique SCDV framework – It enables the fund managers to capture ideas across different market cap segments (Growth, Quality, Value etc)


• Strong bottom-up stock selection – Identify investment opportunities across market cap segments based on in-depth fundamental research


• Technology enabled investment process – Custom build research management system, including multiple analytical tools that help to generate investment ideas


• Seasoned fund management team with a track record – The fund managers have combined experience of 45 years


• Opportunistic investment in special situations – The fund may also invest in opportunities arising from IPOs / FPOs, OFS, promoter buying, demergers and acquisitions

Who should invest in 360 ONE Flexicap Funds?

• Investors with long term investment horizon i.e., 5-7 years or more.


• Investors with a high-risk appetite who can tolerate the short-term volatility associated with equity investments.


• They are suitable for investors who want to invest from their monthly savings through SIP for their long-term financial goals like children’s higher education, marriage, retirement planning, wealth creation etc.


• Investors who wish to avoid the complexities of determining allocation among large, mid, and small-cap stocks independently.

You should consult with your financial advisor, if 360 ONE Flexicap is suitable for your investment needs.