Synopsis: This article covers what dividend yield funds and flexi-cap mutual funds are, lists the top 3 mutual funds from both categories, and compares them
According to Value Research, dividend yield funds gave around 16.5% CAGR over the past 10 years; on the other hand, the flexi-cap funds gave only 14.75% over the same period. This has gotten the attention of investors across the nation.
What is a Dividend Yield Fund?
Dividend Yield Funds are a type of equity mutual fund that invests in companies with a stable history of paying dividends. These funds focus on generating consistent returns by investing in well-established businesses that also distribute their profits among their shareholders.
What is a Flexi Cap Mutual Fund?
Flexi Cap Fund is a type of equity mutual fund that gives flexibility to invest in large, mid, or small-cap company stock without any rigid allocation requirements. This flexibility allows fund managers to adjust the investments to the market conditions.
How We Selected These Funds
We started by identifying the top 3 dividend yield funds and flexi-cap mutual funds (direct plan-growth) from the SEBI-defined equity, ranked based on their 5-year CAGR using data from Tickertape. Individual data was taken from Groww. All figures are based on the latest available period and are used purely for comparative and educational analysis.
Top 3 Dividend Yield Funds with the highest 5-Year CAGR
1. ICICI Prudential Dividend Yield Equity Fund (5-Year CAGR: 24.57%)
- NAV:₹ 62.00
- AUM: ₹6,370.55 Cr
- Expense Ratio: 0.57%
- Exit load: 1% if redeemed within a year
- 3-Year CAGR: 25.11%
- 3-Year Absolute Return: 92.9%
- 5-Year Absolute Return: 198.0%
2. Aditya Birla SunLife Dividend Yield Fund (5-Year CAGR: 20.0%)
- NAV:₹507.85
- AUM: ₹1,523.56 Cr
- Expense Ratio: 1.35%
- Exit load: 1% if redeemed within 90 days.
- 3-Year CAGR: 19.98%
- 3-Year Absolute Return: 72.8%
- 5-Year Absolute Return: 149.1%
3. HDFC Dividend Yield Fund Direct-Growth (5-Year CAGR: 20.08%)
- NAV:₹26.82
- AUM: ₹5,862.99Cr
- Expense Ratio: 0.78%
- Exit load: 1% if redeemed within a year
- 3-Year CAGR: 19.26%
- 3-Year Absolute Return: 67.1%
- 5-Year Absolute Return: 146.3%
Also read: Top 5 ELSS Funds That Outperformed Their Category in the Last 5 Years to Keep an Eye On
Top 3 Flexi Cap Funds with the highest 5-Year CAGR
1. Quant Flexi Cap Fund Direct Growth (5-Year CAGR: 21.83%)
- NAV:₹108.68
- AUM: ₹6,220.57 Cr
- Expense Ratio: 0.71%
- Exit load: 1% if redeemed within a year
- 3-Year CAGR: 19.43%
- 3-Year Absolute Return: 67.7%
- 5-Year Absolute Return: 163.9%
2. HDFC Flexi Cap Direct Growth Plan (5-Year CAGR: 21.68%)
- NAV:₹2,282.94
- AUM: ₹97,451.56 Cr
- Expense Ratio:0.69 %
- Exit load: 1% if redeemed within a year
- 3-Year CAGR: 23.79%
- 3-Year Absolute Return:86.1%
- 5-Year Absolute Return:161.8%
3. JM Flexi Cap Fund (5-Year CAGR: 18.90%)
- NAV:₹274.18
- AUM: ₹26,332.20 Cr
- Expense Ratio:0.63 %
- Exit load: 1% if redeemed within a year
- 3-Year CAGR: 22.00%
- 3-Year Absolute Return:79.3%
- 5-Year Absolute Return:135.6%
Which Fund Performed Better Over 5 Years?
From the performance comparison table, it’s evident that the Dividend Yield Fund performed relatively better than Flexi Cap Funds over the past 5 years. While the average 5-Year CAGR of Flexi Cap Funds is 20.80%, for Dividend Yield Funds, the 5-Year CAGR stands at 21.55%. However, it can be observed that the Flexi Cap Funds have delivered slightly better returns in shorter periods. The average 3-year CAGR of the Dividend Yield Fund is 21.45%, whereas that of the Flexi Cap Fund is 21.74%.
Who Should Consider These Funds?
Dividend Yield Funds are suitable for investors with a long investment horizon who prefer stable equity exposure and relatively low volatility. It’s a good choice for investors who prioritize capital protection over gains. On the other hand, flexi-cap mutual funds are ideal for investors who can handle market fluctuations and can stay invested via SIP for a long time. These funds are focused on long-term wealth generation.
Conclusion
Ultimately, investors should choose funds based on individual risk tolerance, investment horizon, and financial goals, and not solely based on the recent market performance. It’s best to consider both categories as complementary investment tools that’ll diversify your portfolio and help in wealth generation
Disclaimer: The information provided in this article is for educational purposes only and should not be construed as financial advice or investment recommendation. Returns mentioned are based on historical performance and may not be sustained in the future. Mutual fund investments are subject to market risks, including potential loss of capital. Investors are advised to assess their risk appetite and financial goals and to consult a certified financial advisor before investing.
Written by Nila Maria Jacob
