ITI Mid Cap fund NFO launched

 

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

 


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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.


 

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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:

  1. Dividend re-investment facility
  2. Dividend payout facility
  3. 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.


 

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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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Disclaimer : While due precaution has been undertaken in the preparation of this article, The Mutual Fund Guide or any of its authors will not be held liable for any investments based on the above article. The above article should not be considered financial advice and has been published only for your perusal. Due credit has been given in case wherever required, in case you feel any part violates any rights then do get in touch with us and we shall get it duly removed.  
Mutual Fund investments are subject to market risks. Please read the offer document carefully before investing


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