Axis Mutual Fund launched a new fund offer (NFO) for Nifty Midcap 50 Index Fund to help investors build wealth by achieving the right blend of long-term growth and wealth building. The asset management company (AMC) says the fund is suitable for those investors who are seeking long term wealth creation by investing in a fund that seeks to track returns by investing in a basket of Nifty midcap 50 index stocks.
The mid cap index comprises a blend of stocks that have high growth prospects since it comprises midsized companies which are still getting established. Also, they are slightly volatile and quite liquid, highlights the NFO paper released by Axis Mutual Fund. The paper also highlights that mid cap companies have superior growth profile, established track record, maintain flexibility and have lower risk compared to smaller companies.
Returns posted by top midcap funds
| Midcap funds | 1-year return | 3-yr return |
| Aditya Birla Sun Life Midcap | 30.52 | 19.88 |
| Baroda Midcap Fund | 30.52 | 25.24 |
| DSP Midcap Fund | 21.58 | 19.51 |
| ICICI Prudential Midcap | 20.91 | 20.31 |
| L&T Midcap Fund | 15.35 | 17.14 |
| Tata Midcap growth Fund | 22.48 | 23.29 |
(Source: AMFI India)
Returns are direct (%) as on Feb 28, 2022
While projecting midcap index as high-performance index, the fund house says the preference would be given to companies that are available for trading in NSE's futures and options segment at the time of final selection. The AMC states that there would be an endeavour to replicate and track the performance of the Nifty midcap 50 index. There will be market linked returns, a proposition ideal for investors looking for exposure to midcaps.
The full market capitalisation of any F&O constituent in Nifty midcap 150 is at least 1.5 times of the smallest index constituent (based on full market capitalisation) in Nifty midcap 50.
Nifty midcap 50 index
NIFTY Midcap 50 includes top 50 companies based on full market capitalisation from Nifty Midcap 150 Index and on which derivative contracts are available on National Stock Exchange (NSE).
The top 10 stocks in Nifty midcap 50 include Tata Power, SRF, Voltas, AU Small Finance Bank, Mphasis, Bharat Electronics, Mindtree, Trent and Page Industries with a total composition of 35.71 percent.
The price to earnings (P/E) ratio of Nifty midcap 50 index is 25.05 and P/B ratio is 3.02 and dividend yield is 1.37. The volatility of these stocks is 22.77 percent and one year beta is 1.14 and correlation is 0.81. The fund house asserts that midcap 50 has consistently outperformed Nifty 50 and Nifty 500, thus justifying the choice of index in the proposed fund.
Nifty midcap 50 outperformed the broader index of Nifty 50, and Nifty 500
| Year | Nifty midcap 50 return (%) | Nifty 50 (%) | Nifty 500 (%) |
| 1 | 17.22 | 17.27 | 19.45 |
| 2 | 33.46 | 24.07 | 26.21 |
| 3 | 20.89 | 17.35 | 18.44 |
| 5 | 14.61 | 15.09 | 14.64 |
| 7 | 13.80 | 10.92 | 11.61 |
| 10 | 14.22 | 13.48 | 14.22 |
(Source: Axis MF Research Data as of 28th February 2022)
The chart above shows the one-year return posted by Nifty midcap 50 was 17.22 percent, two-year return was a whopping 33.46 percent and three-year return was 20.89 percent.
Investors interested in subscribing can see the following details:
| Minimum amount | ₹5,000 and in multiples of Re 1 thereafter |
| Exit load | 0.25% if redeemed within 7 days from the date of allotment |
| Expense ratio | Up to one percent |
However, the long-term returns were slightly muted. As we can observe, the five-year return of Nifty midcap 50 was 14.61 percent, 7-year-return was 13.80 percent and 10 year return was 14.22 percent.