I would like to start an SIP with a mid-cap fund. My horizon is 8-10 years. I have narrowed down on Axis Midcap and Invesco India Midcap. How must I decide? Which is the better fund?
Having a systematic investment plan, or SIP, with a long-term horizon is a great way to supplement your core portfolio. However, you have not mentioned the amount that you are looking at investing and your portfolio’s exposure to mid-cap funds.
Axis Midcap Fund
This fund is a great choice given that the manager uses a long-term approach to investing and seeks to invest in long-term sustainable growth stories. The fund also carries a much lower turnover ratio as compared to peers, which essentially ties in with the manager’s strategy of a buy-and-hold approach to investing. Shreyas Devalkar has been managing this fund since November 2016 and we think that his stock picks are extremely well thought out. We carry a Morningstar analyst rating of ‘Bronze’ on this fund right now.
Invesco India Midcap
This fund invests over 80% of its portfolio in a combination of mid and small caps, keeping large caps minimal in the portfolio. While historical performance has remained positive, we think that past performance is not an indicator of how the fund will do in the future. This is also a long-term, buy-and-hold strategy with a significantly low turnover. The fund’s higher investment in the small and mid-cap space could lead to some underperformance in markets that are out of favour for these segments. The expenses on the growth plan are also on the higher side as compared to peers.
Some of the other funds that you could consider are HDFC Mid-Cap Opportunities Fund and Kotak Emerging Equity.
For more information you can read How to pick mid-cap funds.
Registered readers can post their queries by accessing the Ask Morningstar tab. Our team will answer SELECT queries ONLY relating to mutual funds and portfolio planning.
