Capitalmind's flexi-cap fund will bet on quantitative strategy, flexibility, global exposure: Deepak Shenoy

Capitalmind Mutual Fund, a fresh entrant in India’s mutual fund industry, is setting itself apart with a quantitative, data-backed approach, particularly through its flagship flexi-cap fund. Unlike the prevalent discretion-led and large-cap-heavy strategies dominating the market, Capitalmind is banking on flexibility, algorithmic decision-making, and global adaptability to define its identity.

At the heart of Capitalmind's philosophy lies quant-based investing. In an interview with ET Wealth, CEO Deepak Shenoy described it as the fund’s “forte,” emphasising their commitment to refining models and relying on data rather than subjective judgment. “We assess price sentiment and respond to market dynamics. Our focus is not on prediction but preparation,” he explained, underlining the firm's belief in rigorous model refinement over forecasts.

The flexi-cap strategy, by design, enables the fund to nimbly allocate capital across large-, mid-, and small-cap stocks, depending on evolving market conditions. But where Capitalmind differentiates is in its avoidance of the common large-cap bias found in many existing flexi-cap offerings. Shenoy was asked that Capitalmind Mutual Fund's first offering, a flexi-cap fund, comes into a space currently filled with look-alike offerings running a distinct large-cap bias. 

Shenoy said: "Our approach is quantitative in nature, which is a little oddity among flexi-cap funds, because they tend to be more discretion-led than quantitative."

He added: "Since the flexi-cap strategy is quantitative, it figures out what to buy — whether it is momentum, value or any other.” This agile and adaptive philosophy is also evident in the fund's use of multiple investment factors. Momentum remains a key signal, but not an exclusive one. “Yes, what we have figured out is that momentum is one of the strongest factors in the investment zone,” Shenoy shared. 

However, he acknowledged its limitations during sideways or sharply declining markets. To manage such conditions, the fund pivots to alternative factors or hedging strategies, all while maintaining the required 65% equity allocation to qualify as an equity fund under Indian regulations.

Beyond domestic equities, Capitalmind’s model allows for international diversification, further enhancing portfolio resilience. By combining momentum with diversification and risk management, the fund seeks to deliver robust performance across market cycles.

Shenoy also highlighted the fund’s potential appeal to a broader investor base, especially those seeking a more tax-efficient alternative to Portfolio Management Services (PMS) or Alternative Investment Funds (AIFs). Mutual funds, by nature, offer lower minimum investments, easier access, and better tax treatment, aligning with Capitalmind’s mission of making professional asset management more accessible.

Sectors like defence and manufacturing, which might otherwise be overlooked in traditional fund structures, could also feature prominently in the portfolio if they align with the fund’s algorithmic screens and macro assessments, Shenoy said.