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Ramalingam Kalirajan |11161 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Mar 17, 2026

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Asked by Anonymous - Mar 06, 2026Hindi

Why is UTI Flexi cap still underperforming? Should I take a call of taking the money out or will it bounce back? please suggest

Ans: Good that you are questioning performance instead of reacting emotionally. This is where most investors go wrong. Your thinking is correct, but decision should be based on reason, not recent return.

» What is Happening with UTI Flexi Cap

– The fund has been underperforming benchmark and peers in recent years
– Example: around 4% return vs benchmark ~14% in one period

This is not a small gap, so your concern is valid.

» Core Reason for Underperformance

The issue is not poor stock picking, but investment style.

– Fund follows quality-growth approach
– Invests in strong companies with stable earnings
– Avoids cyclical and “cheap” stocks

But market reality:

– Last 3–4 years → value, cyclicals, metals, PSU, etc. did very well
– Quality stocks underperformed

So:
– Fund style ≠ Market trend

This mismatch caused underperformance

» Important Insight – This is a Cycle

– Market keeps changing leadership
– Sometimes quality wins
– Sometimes value wins

Fund manager is not changing style just to chase returns

This is actually a positive sign of discipline.

» Long-Term Track Record

– Over long periods, fund has delivered reasonable returns
– Even 5-year returns have been competitive earlier

But consistency has been average:
– Beats benchmark only about ~50% of the time

So:
– Not a top performer
– Not a worst fund also

» Will It Bounce Back?

Very important question.

Yes, it can bounce back IF:

– Market shifts back to quality stocks
– Earnings-led companies regain leadership

Fund house itself believes:
– “Quality will outperform over long term”

But timing is uncertain.

» Should You Exit or Continue

Do NOT take decision based only on recent 1–3 year performance.

Use this framework:

Continue IF:
– You have 5+ year horizon
– You believe in quality style
– Fund is only part of your portfolio

Exit or Reduce IF:
– Fund has underperformed for 5–7 years consistently
– You already have better flexi cap options
– Allocation is high in this fund

» Practical Strategy for You

– Do not redeem fully in one go
– Stop fresh SIP (if you have better funds)
– Gradually switch to stronger performing flexi cap funds
– Keep some allocation to diversify style

This avoids regret.

» One Hidden Risk You Should Note

– New fund managers added recently
– AUM is also slightly reducing

This shows:
– Transition phase in fund

So monitoring is important.

» Finally

UTI Flexi Cap is not a “bad fund”, but it is a slow-moving, style-driven fund.

– Underperformance is due to market cycle, not collapse
– Bounce back is possible, but not guaranteed
– Blind patience is also not correct

Best approach:
– Reduce dependence, not panic exit
– Keep portfolio diversified across different fund styles

This way you protect both return and peace of mind.

Best Regards,

K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

https://www.linkedin.com/in/ramalingamcfp/

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