Rising above the gloom of the COVID-19 pandemic, Indian stock markets are finally on a bull run as key indices like Nifty and Sensex touch new highs. The market rally is drawing a lot of investors towards mutual funds as they offer people a chance to invest across sectors and reap rewards by betting big on performing players.
While there are many categories of mutual funds schemes available for investors to park their funds in, Multicap is emerging as a preferred choice for several individual investors due to its potential of wealth creation over the long term. Another advantage that they enjoy over other kinds of mutual funds is that they enable one to invest in a range of market capitalisations.
In tandem with the investor sentiment, Axis Mutual Fund has launched its new multicap mutual fund scheme Axis Multicap Fund. It is an open-ended scheme investing across large cap, mid cap and small cap stocks.
In a conversation with YourStory, Chandresh Nigam, MD & CEO, Axis AMC deep-dived into the fund house’s vision for its new offering and what investors can expect from the fund.
Here are the key takeaways from the conversation:
Multicap mutual funds: can be a one-stop shop for investors
Chandresh said that multicap mutual funds were a ‘one-stop shop’ for investors that bridged a crucial gap by increasing investors’ exposure to all three categories of stocks.
“The way different segments of the market react to different circumstances varies. Sometimes the market is really focused on mid-cap stocks, at other times large-cap stocks are doing better. And, there are also instances when small-cap stocks see sharp movement. The variation allows investors to not miss out the action in any segment,” he said.
Plus, there is a scope for active management too. “If a fund manager feels that a certain category can offer better returns, he/she can always change the composition of the portfolio, while ensuring that the investor has reasonable exposure to all segments,” he added.
Advantage of investing in the entire lifecycle of a company
When it comes to assessing market capitalisation for a multicap fund, it is not uncommon to see a company end up in different segments over its lifecycle. There are instances where a small-cap company might have performed well and is later categorised as a mid-cap or large-cap stock.
Chandresh noted that with a fund like Axis Multicap Fund, investors are not forced to sell out a stock just because a company has moved on from one category to another. “These funds allow you the flexibility to participate in the entire lifecycle of the company. Their structure enables us to manage a fund the right way i.e. identifies good businesses and stay invested in them. In other words, multicap funds benefit fund managers from the flexibility perspective and investors in terms of returns,” he explained.
He also said that the main advantages of being able to manage exposure to various asset classes are manageable risks and stable returns. “Take the case of small-cap stocks, if you expect stocks in the category to fall, you can shift your portfolio and wait till the market corrects its course.”
The ideal investor profile
With the Axis Multicap Fund, the fund house is eyeing high, sustainable and long-term growth with a scheme that targets all segments of the market, said Chandresh.
Talking about the ideal investor profile for the new scheme by Axis Mutual Fund, he said that investors who can stay invested for a period of 3-5 years and are looking for a tool for capital appreciation.
“The time period sets the right expectations for investors. Given how volatile markets are, the stocks can register negative growth one year and rise next year. Your chances of losing money are really low even if the markets are bad or the P/E ratios contract because the underlying earnings are increasing,” he added.
Potential to benefit from all the three viz large, mid & small market cap. The scheme does not guarantee any returns.
For detailed asset allocation & investment strategy, kindly refer to scheme information document.
(The product labelling assigned during the New Fund Offer is based on internal assessment of the Scheme Characteristics or model portfolio and the same may vary post NFO when actual investments are made)
Disclaimer: This press release represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s). Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC). Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.
The information set out above is included for general information purposes only and does not constitute legal or tax advice. In view of the individual nature of the tax consequences, each investor is advised to consult his or her own tax consultant with respect to specific tax implications arising out of their participation in the Scheme. Income Tax benefits to the mutual fund & to the unit holder is in accordance with the prevailing tax laws as certified by the mutual funds consultant. Any action taken by you on the basis of the information contained herein is your responsibility alone. Axis Mutual Fund will not be liable in any manner for the consequences of such action taken by you. The information contained herein is not intended as an offer or solicitation for the purchase and sales of any schemes of Axis Mutual Fund.
Past performance may or may not be sustained in the future.
Stock(s) / Issuer(s)/ Sectors mentioned above are for illustration purpose and should not be construed as recommendation.
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.