Axis Small Cap Fund: High-Growth Potential for Investors?
Axis Small Cap Mutual Fund provides a suitable choice for investors looking for a small-cap fund with strong growth potential. This mutual fund gives exposure to companies with substantial growth potential by primarily investing in lower market-capitalization companies.
This blog gives an overview of the fund’s performance and explains why long-term investors find it attractive.
Overview of Axis Small Cap Mutual Fund
Launched in November 2013, the Axis Small Cap Fund invests in smaller market-capitalization companies, which often have high growth potential due to lower valuations and less research coverage. Though small-cap funds are more volatile, they can offer significant returns if managed well.
As of Oct 9, 2024, the fund had an NAV of ₹122.15 and managed assets worth ₹23,771.70 crore.
The fund has achieved an annualized return of 26.16% since inception, surpassing its benchmark return of 22.42%. A ₹10,000 investment has grown to ₹1.20 lakh.
Why Consider Axis’ Small-Cap Fund?
For investors looking for significant growth potential in small-cap firms, the Axis Small Cap Mutual Fund is an appealing alternative.
Performance and returns:
As of Oct 9, 2024, the five-year annualized return of this equity mf of 30.49% indicates the Axis Small Cap Mutual Fund’s impressive performance. It outperformed the category average by 34.85% in the last year and 82.88% in the previous three years.
Portfolio Composition
The fund invests in high-growth small-cap companies across sectors like IT, consumer goods, chemicals, and pharmaceuticals, balancing risk while targeting strong returns.
Risk and Volatility
While the fund offers attractive growth potential, it comes with increased volatility. Investors should be prepared for short-term fluctuations in exchange for significant long-term rewards. The management team focuses on companies with strong fundamentals to manage risk.
Fund Management
Managed by Tejas Sheth and Mayank Hyanki, the fund emphasizes quality small-cap stocks and diversification, aiming for long-term growth through solid business models and scalability.
Who Should Invest?
The Axis Small Cap Mutual Fund is ideal for investors who:
- Have a Long-Term Horizon: Small-cap stocks tend to be more volatile in the short term, but they can offer substantial returns over a period of 5-7 years.
- High-Risk Appetite: Due to its exposure to smaller companies, the fund is better suited for investors who are comfortable with higher volatility in exchange for the possibility of higher returns.
- Portfolio Diversification: Investors looking to diversify their portfolio with exposure to high-growth small-cap companies will find this fund a valuable addition.
Axis Small Cap Mutual Fund’s Growth Potential
The Axis Small Cap Mutual Fund is poised for continued strong performance. The fund targets small-cap companies with solid fundamentals, growth potential, and strong management, focusing on high-quality businesses with scalable operations and a competitive edge.
The Axis Small Cap Mutual Fund’s portfolio is diversified across various sectors, balancing risk while targeting high-growth areas. Key sectors include:
- Information Technology (IT)
- Pharmaceuticals
- Chemicals
- Consumer Goods
Some of the key holdings include Galaxy Surfactants, City Union Bank, and Fine Organic Industries. The fund maintains an average of 60-80 stocks at any given time, ensuring that it remains well-diversified across industries.
Investing early in promising companies, the fund provides exposure to future industry leaders. With India’s growing economy and favorable conditions, including digitization and infrastructure spending, it is well-positioned to deliver high returns for investors with a high risk tolerance.
Conclusion
The Axis Small Cap Mutual Fund is ideal for investors seeking high-growth potential. With strong historical performance, a diversified portfolio, and skilled management, it provides solid investment opportunities in emerging businesses.
Despite its volatility, the fund’s long-term growth prospects and alignment with India’s expanding economy make it a promising choice for those with a higher risk tolerance.