Axis Midcap Fund Review: Invest or give it some time to perform?

Published: September 22, 2019 at 10:53 am

This is a performance review of Axis Midcap Fund. We find out how consistently it has performed against its benchmark and peers to find out if one can invest based on recent good performance or give it some more time to perform. Regular readers may recall that last week we had looked at Axis Small Cap Fund

Axis Midcap was started in Feb 2011 with a mandate to invest 75% in midcap companies (later revised to 65% to comply with SEBI rules). Prior to May 2018, it had a specific mandate to focus on companies with the largest market cap within the mid cap space. Since May 2018 it has had no such restriction.

With the little information available about historical market cap allocation, I could not find anything out of place. Axis Midcap Fund has maintained at least 65% exposure to midcap stocks for the last three years. The fund has also held about 15-17% of large cap stocks. Sadly these numbers depend on which source you consult!

VR had listed this fund as a mid and small cap fund in 2015. So at the very least, it had noticeable small cap exposure in the past  Its cash exposure has increased in the last few months. This year it has held about 18-19% cash. In Jan 2018 just prior to the onset of the fall in midcap stocks, the fund was fully invested with 94% equity.

So with the available data, I would like to assume that the recent performance – last 1Y trailing return of the fund is 3.7% while BSE Midcap fell by 10% – is due to a mix of cash, large caps and no small caps (the has held a small exposure in the last few months).

Let us now find out how the fund has performed against benchmarks and a couple of peers.

Axis Mutual Fund Performance Analysis

Let us first compare the fund with Nifty Midcap 150 TRI and BSE Midcap TRI over every possible 3,4, and five year period in its history.

Three years

Axis Midcap Fund Rolling Returns vs Benchmark over three yearsFour Years

Axis Midcap Fund Rolling Returns vs Benchmark over four yearsFive years

Axis Midcap Fund Rolling Returns vs Benchmark over five yearsNow, that is not what you would refer to as consistent performance!

Axis Mutual Fund vs Peers

Let us now compare the fund with two of My Handpicked Mutual Funds July 2019 (PlumbLine) – HDFC Midcap Opp and Franklin Prima.

Axis Midcap Fund vs Peers Three Year Rolling ReturnAxis Midcap Fund vs Peers Four Year Rolling ReturnAxis Midcap Fund vs Peers Five Year Rolling Return

Both the HDFC and Franklin Midcap funds have had a much better track record than Axis Midcap. Only after the fall in midcaps has the Axis fund picked up.

Summary: Invest or give it some time to perform?

Although Axis Midcap has managed to do better than other funds and indices since Jan 2018, it does not have a good long term track record. While existing investors can continue, new investors need to wait and watch and see how it fares in future. There are other funds in the midcap category with an impressive long term category.  Use the Sep 2019 Equity Mutual Fund Performance Screener to find consistent performers.

Although Shreyash Devalkar who has steered Axis Midcap and Axis Bluechip (reviewed here) since Nov 2016 has done a good job, I think this fund needs more time under its belt.

 

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About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements write to pattu [at] freefincal [dot] com
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