Axis Midcap Fund
Midcap mutual funds saw a rise in their popularity in 2021 as they delivered handsome returns for investors during the year. The average return of midcap funds in 2021 is pegged at 38%. Midcap mutual funds are the new wonder kid for investors seeking capital appreciation. If you are looking for long-term wealth creation featuring the midcap category, Axis Midcap Fund may be the one for you.
What are midcap mutual funds?
A Midcap fund as the name suggests invests in the stocks and shares of midsize companies. According to the Securities and Exchange Board of India (SEBI), midcap companies are those that are ranked between 101 to 250 as per their market capitalisation. These companies fall between small-cap and large-cap companies. They have a strong potential for success and this is what makes them great bets. When an economy like India is growing, midcap companies can grow at a faster rate than already-established large-cap companies. And so, if they succeed, investors are rewarded quite handsomely. On the other hand, when the market slows down, these companies get affected more than large-cap companies.
What are the features of the Axis Midcap Fund?
Here is a breakdown of the features of the Axis Midcap Fund:
- Open-ended: It is an open-ended scheme so investors can buy and sell fund units any time during the day according to the Net Asset Value (NAV) of the fund. They are not bound by a fixed maturity period. So you can exit the fund or sell your units as per the daily Axis Midcap Fund NAV.
- Focus on equity: The fund focuses on equity and equity-related instruments. Equity is preferred by investors seeking to generate a wealth corpus as they deliver high returns in the long term.
- Concentrated on midcaps: The fund invests in midcap companies that have an inherent potential to generate superior returns because of their potential for rapid growth
- Diversified: Even though the fund has a focus on midcaps, the investment is spread across sectors, thereby, providing diversification to keep risk under control. The top five sectors invested in by the fund are finance, information technology, consumer, capital goods, and healthcare.
Why should you buy the Axis Midcap Fund?
You should buy the Axis Midcap Fund if you are looking for the following:
- Long-term capital appreciation: If you are committed to staying invested for at least five years to grow your wealth, then you can invest in this fund. Equity investments perform well if you have a long-term horizon, that is, five to 10 years of investment. Equity will then beat inflation and has a greater capacity to deliver great returns.
- Investment in equities: This fund will inject a healthy dose of equity into your investment portfolio.
- Complement existing large-cap investments: You may currently have large-cap mutual fund investments. The Axis Midcap Fund offers the potential to deliver higher returns than large-cap investments.
- You are not risk-averse: Midcap mutual funds can deliver greater returns than large-caps funds. At the same time, they are less risky compared to small-cap funds.
What are the options for the Axis Midcap Fund?
When buying the Axis Midcap Fund, you can choose the Growth plan or the Income Distribution cum Capital Withdrawal (IDCW) plan. With the IDCW option, the profits earned by the fund are paid out to the investors. This option is ideal for those looking for regular income from their investment.
For wealth creation, the Growth plan is preferred. Here all profits earned by the fund will be reinvested into the fund. This strategy utilises the power of compounding, leading to greater wealth creation.
With the Axis Midcap Fund Direct-Growth plan, you purchase fund units directly from the company, usually via the website. As there are no brokerage or commission charges involved, the fund house passes on this benefit to you through higher returns.
Many people take the advice and help of an agent, advisor, or broker for their investments. When you purchase the fund via such an intermediary, the plan is called the Axis Midcap Fund Regular-Growth plan.
How can you invest in an Axis Midcap Fund plan?
You can invest in the plan via either the lump sum mode or Systematic Investment Plan mode. The minimum investment required is Rs 5000 for the lump sum mode and Rs 500 for the SIP mode. The minimum additional investment is Rs 100. The SIP has to be held for at least six months.
The bottom line
The Axis Midcap Fund offers many benefits to investors, and the biggest benefit is the potential for higher-than-average returns. That is a huge benefit indeed. However, investors must be sure of their risk appetite when investing. For those willing to take on additional risk, the Axis Midcap Fund might get you closer to your dreams faster than you think!