New Delhi, Aug. 3 -- Over the years, flexi-cap funds have emerged as one of the most popular equity mutual fund categories because of their flexibility to invest across large-, mid-, and small-cap stocks.

However, a "Thinking Aloud" report by Axis Mutual Fund argues that this flexibility has, in practice, resulted in a persistent bias towards large-cap stocks, limiting participation in broader market rallies.

According to the report, multi-cap funds, which are mandated to invest at least 25% each in large-cap, mid-cap, and small-cap stocks, have maintained a more balanced portfolio structure. This has helped them participate more consistently in the broader market rally over the past few years.

According to the report, the key attracti...