Fund of Fortnight

This is our mutual fund recommendation. Every fortnight ,we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.

Axis Midcap Fund - Direct Plan (Growth)

Reason for recommendation

The rise in equity indices from the last quarter of CY20 has been spectacular all over the world. The Indian equity market is no exception and has gained considerably in the last few months. The best part is that the broader markets represented by small-caps and mid-caps are also participating in the gain. In the last six months, Nifty Mid-Cap 100 index is up by almost 43 per cent compared to Nifty’s 34 per cent. This shows that mid-caps after under-performing large-caps for almost two and a half years are finally inclined to gain.

Against this background, investing in a mid-cap fund makes perfect sense. Axis Mid-Cap Fund is one such mid-cap-dedicated fund, which is just the perfect candidate for investment. It is a pure mid-cap-dedicated fund and has invested 76.12 per cent of its corpus in mid-cap stocks, 22.53 per cent in large-caps and only 1.4 per cent in small-caps. The good part of the fund is that it has outperformed its benchmark in the falling markets of 2018 and the volatile market of 2020. In the last three years it has generated return that is twice the benchmark and the category.

Going forward, Axis Mid-Cap Fund is well-poised to beat its benchmark with its well-diversified portfolio. As of December 31, 2020, the fund held 54 stocks, wherein the top 10 stocks held 34.97 per cent of the corpus. Moreover, the fund is overweight on the financial, chemical and services sectors, which are likely to perform better in the near future. This fund is well-suited for a low risk-taking investor as it has comparatively lower standard deviation and beta when compared to its category.