Mutual Funds

Axis Midcap Fund: A good mid-cap play

Yoganand D | Updated on November 21, 2020

Since its inception in February 2011, the fund has delivered a CAGR of 16.9%

Mid-cap stocks have been on a strong rally since March this year. However, the valuation of the mid-cap index is below that of the large-cap index, making mid-cap stocks a good play.

Investors can buy the units of Axis Midcap. The fund has delivered good returns over the long and short terms, outpacing the benchmark index — S&P BSE MidCap TRI. Since its inception in February 2011, the fund has delivered a CAGR of 16.9 per cent. Investors can take the SIP (systematic investment plan) route for discipline in investing and for averaging out costs across market cycles.

Strategy and portfolio

Axis Midcap sticks to the mandate of holding at least 65 per cent of its assets in mid-cap stocks. Its current mid-cap allocation is 70.8 per cent of the portfolio; large-cap allocation is around 20 per cent and small-cap is 1.3 per cent.

Debt holdings accounts for 7.6 per cent at present.

During market volatility, the fund adopts a defensive approach by taking higher exposure to debt. For instance, in August 2019, the scheme upped its debt exposure to 17.4 per cent.

Similarly, this February, when the markets began crashing, it increased debt to 17.4 per cent.


The fund is, however, quick to cash in on a rally by redeploying the money into equities.

Exposure to individual sectors and stocks is not concentrated. Barring the top three stocks, the exposure to individual stocks is less than 4 per cent.

Among the sectors, excluding pharma and consumer durables, other sectoral allocations each constitute less than 10 per cent of the portfolio.

The fund focusses on emerging sectors or businesses that have the potential to deliver high growth and takes a bottom-up stock selection process. During the pandemic, the scheme added sectors such as telecom and fertilisers, adding stocks of Bharti Airtel, Tata Communications and Coromandel International. With the farm sector being a bright spot in the last few months and the metrics of telecom players such as Bharti Airtel improving, these additions have helped the fund.

Pharma, once an out-of-favour sector, is the top preferred one now with 14 per cent allocation. Stocks suh as Ipca Laboratories, Cadila Healthcare, Sanofi India and Alembic Pharmaceuticals have given good returns over the past year.

Other top sectors are consumer durables, software, industrial products and finance. Over the past year, the scheme has heightened its exposure to the stocks of Ipca Laboratories, Tata Consumer Products, Balkrishna Industries and PI Industries.

Some of the recently added stocks are Coforge, Crompton Greaves Consumer Electricals, Gujarat State Petronet and Honeywell Automation India.

Published on November 21, 2020

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