ITI Mid cap
fund is a NFO from the house of ITI Mutual Fund.
It would be
an open equity scheme investing in mid cap companies as defined by AMFI.
The fund
would be open for subscription from February 15, 2021 to March 01, 2021.
NFO details for ITI Mid Cap Fund
|
Scheme Opens |
15/02/2021 |
|
Scheme Closes |
01/03/2021 |
|
Fund Manager |
Mr. George Joseph Mr. Pradeep Gokhale |
|
Benchmark |
NIFTY Mid Cap 100 TRI |
|
Fund Category |
Mid Cap |
|
Exit Load |
1% if redeemed on or before 1 year |
ITI Mid Cap Fund Investment Objectives
The
investment objective of this fund is to generate long term capital appreciation
by investing in equity and equity related companies in the mid cap space.
There is no
guarantee that the investment objective of the fund would be realized.
Additional reading: Click Here to read about the various types of equity mutual funds
ITI Mid Cap Fund Allocation
The asset
allocation for the fund would be something like this
|
Asset Class |
Minimum % |
Maximum % |
|
Equity and Equity Related
instruments of Mid cap companies |
65 |
100 |
|
Other Equity and Equity Related
instruments |
0 |
35 |
|
Debt & Money market instruments |
0 |
35 |
|
Units issues by REITS and InvITs |
0 |
10 |
The above
figures are only indicative and not fixed, the fund managers have the liberty
to move across the asset classes depending upon prevailing market conditions as
long as they remain within the mandate permitted.
The fund
can also invest in REITs and InvITs if so desired.
Investment style for ITI Mid Cap Fund
The fund would be an open-ended mid cap equity scheme
investing in companies that fall within the definition of mid cap companies by
AMFI.
The fund would need to stay invested in a minimum of 65% of
the overall portfolio in mid cap companies at all times.
The remaining 35% can be invested as per the liking of the
fund manager, there is no restriction of any kind on the 35%.
The fund would have a maximum of 3% investment in one
particular stock with minimum to negligible cash call.
Categorization of companies
Large Cap: 1st -100th company
in terms of full market capitalization
Mid Cap: 101st -250th company
in terms of full market capitalization
Small Cap: 251st
company onwards in terms of full market capitalization
Additional reading: Click Here to read more about how mutual funds are taxed
ITI Mid Cap Fund Options
ITI Mid fund provides investors with the following two
options
Growth: This option is most suited for investors who are not
seeking dividends or who are not dependent on mutual fund dividends as a source
of monthly income and would rather see their capital appreciate.
Dividend: This option is most suited for investors who are
seeking dividends or who are dependent on mutual fund dividends as a source of
monthly income and are not looking for capital appreciation.
The Dividend option further has the following options:
- Dividend re-investment facility
- Dividend payout facility
- Dividend sweep facility
In case you do not opt for a particular option between
growth and dividend then the default option would be growth.
In case you opt for dividend option but fail to mention the
facility then the default facility would be reinvestment facility.
What
is a Mid cap mutual fund?
A mid cap mutual fund needs to invest a minimum of 65% into
mid cap companies at all times.
These include companies between 101 to 250 in terms of
market capitalization.
Some mid cap mutual funds investing the remaining 35% into
mid cap companies too whereas others prefer to use large cap stocks for the
remaining 35% for downside protection.
Therefore, knowing your risk profile and aligning it with
the mid cap fund that follows a strategy aligned with your risk profile is
important.
Mid cap mutual funds are more aggressive than large and
flexi cap mutual funds but also have more potential for higher returns.
Features of ITI Mid Cap fund
It needs a minimum of 65% investments in mid cap stocks as defined
by AMFI.
Maximum of 60 stocks in the portfolio.
Maximum of 3% investment in one particular stock.
Minimum to negligible cash call.
Investment strategy of ITI
Mid Cap fund
The investment strategy of the fund would be something based on
the following lines:
Looking for emerging sectors with high growth potential like
healthcare, logistics and e – commerce and so on.
Companies with growing market share and leaders in a niche market.
Companies that are likely to benefit from the transitioning from
unorganized to organized sectors.
Companies likely to benefit from government initiatives like
Aatmanirbhar Bharat and so on.
Should you invest in a mid
cap fund?
Mid cap funds are for investors who are ready stay invested for
the long haul, 7 years or more and the longer the better.
Mid cap funds need to go through various cycles only after which
they reap rewards for staying invested for so long.
As an investor you also need to be aware of your risk profile
since mid cap funds are more volatile than other equity funds and therefore are
not suited for a conservative investor.
Multi cap funds, flexi cap funds, elss/tax savings funds, large
and mid cap funds, etc. all have some portion of mid cap stocks in their
portfolio but not as much as a pure mid cap fund and therefore the role of a
mid cap fund cannot be substituted by any other fund.
You should never invest in a mid cap fund only looking at past
returns, you should also consider the volatility it carries cause if you do not
stay invested during volatile times then you also miss out on the opportunity
of long term healthy returns.
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