Investing in mid-cap funds requires investors to stay invested for at least a period of five years. Recently, due to the volatility in the market, many investors who invested in mid-cap funds started redeeming their investments, as the mid-cap funds aren’t performing well. However, what investors need to consider is that these funds are bound to be volatile, and you cannot expect higher returns from these funds in the short term. In this article, you will read about Axis Midcap Fund which is one of the top funds in the mid-cap segment.
What is Axis Midcap Fund?
Axis Midcap Fund is an equity fund that invests around 65% of its AUM in equity or equity-related assets of mid-cap companies. Mid-cap companies refer to the companies which rank between 101st and 250th per market capitalisation in India.
As per recent data collected on the 18th of August, 2022, the fund has an asset under management worth Rs. 18676.62 crores, and its NAV is Rs. 78.18. It has 88.01% of domestic equity investments. Out of this, 44.66% is invested in mid-cap stocks at present. The fund has 14.6% small-cap stocks and 12.96% large-cap stocks as well.
Some of the top holdings of the fund are Cholamandalam Investment & Finance Co. Ltd., which constitutes 4.10% of this fund's holdings. Then another 3.95% is invested in ICICI Bank Ltd., followed by Trent Limited, which constitutes 3.21% of the fund. Apart from these, there are Bajaj Finance Ltd., Pi Industries Ltd., and others.
As you can see, the fund invests across sectors, whether the financial or banking sector, retail sector, agrochemicals, plastic products, and a lot more. This means your portfolio will get well diversified by investing in Axis Midcap Fund Direct Plan.
How has it been performing in the past ten years?
Now let’s take a look at the performance of the fund in the past ten years. To understand the future of any fund or, for that matter, any investment instrument, it is necessary to evaluate its past performance and historical price movements.
So, Axis Midcap Fund Direct Plan generated 19.76% average annualised returns in the past years since its launch. It was launched in 2013’s January, so in the past 9 years and 8 months, the fund has offered this return and the absolute return of 467.76%. The annualised return for the category is 19.34%, slightly lower than the fund’s return.
The fund outperformed in the past 5-years as it generated an annualised return of 19.73%, while the category average is 14.80%. However, if you evaluate the past 3 years' performance, then you will understand the fund generated around 26.92% return on an average basis but it was lower than the category average of 27.57%. This means the fund outperformed the category during the previous years or in the 4th and 5th years of the past 5 years.
This also suggests why mid-cap funds are good for long-term investments. As you can see, the fund can generate better returns in the long-term, so it is always better to invest in midcap funds like Axis Midcap Fund Direct Plan for at least five years while getting higher returns and exploring the benefits of investing in mid-cap one should invest and hold for ten to fifteen years in a row. While the above returns were from lump sum investments, if you had invested in this fund via SIP, then in the past five years, your average annualised return would have been 22.22%, and the absolute return was 73.62%.
Is it a good investment for the next 20 years?
Now we know how the fund has performed since its inception and in the recent past, and looking at the data and information related to the past performance, it can be determined that the fund has the potential to perform well; however, given a longer tenure for investing. Since mid-cap funds generate higher returns in the long-term, in the next 20 years, investment in this fund may provide exponential returns.
Another thing to consider while investing in this fund is the risk associated with the fund. You will be amazed to know that all the risk analysis ratios like Beta, Standard Deviation, Sharpe Ratio, Jenslon’s Alpha, and others indicate low volatility and better risk-adjusted returns from this fund.
What are the costs involved in investing in this fund?
When you are analysing a fund for long-term investments, or even short-term investments, you need to consider the cost involved. The primary cost is the expense ratio which is 0.52% for the Axis Midcap Fund Direct Plan. There is an exit load as well but only applicable if more than 10% of the investment is withdrawn within 12 months from the time of investment.
Final thoughts
So, Axis Midcap Fund is one of the top mid-cap funds which is providing good returns over the long term. Moreover, the risk factors of the fund are on the lower side which makes the fund more sought after.
Top comments (0)