Why Is It Smarter To Start A Monthly Sip In Axis Small Cap Fund?

A mutual fund is an investment product, essentially a basket of securities consisting of stocks, bonds, and other money market instruments. The underlying securities of a mutual fund portfolio will vary depending on the type of mutual fund. Equity mutual funds possess a very high investment risk, but they might be able to deliver over the long term. Large cap funds invest in financially established companies. Mid cap funds predominantly invest in equity and equity related instruments of mid cap companies for income generation. Small cap funds are those equity schemes that aim at generating capital appreciation over the long term by investing in equity and equity related instruments of small cap companies. 

What is a small cap fund?

As mentioned earlier, a small cap fund is an open-ended equity scheme that invests a majority of its investible corpus in small cap stocks. They invest in equity and equity related instruments of those companies that are ranked beyond 250th in terms of market capitalization. Small cap funds have a high risk returns trade-off. Large cap funds invest a majority of their investible corpus in top 100 companies whereas mid cap funds invest in equity and equity related instruments of those companies that are ranked from 101 to 250 in terms of market capitalization.

Small cap funds tend to be more volatile than large cap funds. However, one must note that all equity mutual funds possess a fair amount of investment risk. Investors may have to determine their appetite for risk before making an investment decision. 

Investments in small cap funds are considered by investors with a very high risk appetite and long term investment horizon. Small cap companies need time to grow and hence investments made in these funds may need more time. The investment risk in small cap funds might mitigate over the long term. Since equity markets are highly volatile, any fluctuation in the market will not affect a small cap fund portfolio in the long run.

Axis Small Cap Fund – An equity scheme by Axis Mutual Fund

Axis Small Cap Fund is an open-ended equity scheme predominantly investing in small cap stocks. The investment objective of Axis Small Cap Fund is to generate long-term capital appreciation from a diversified portfolio of predominantly equity & equity related instruments of small cap companies.

Benefits of Axis Small Cap Fund

•    The scheme adopts a bottom up approach to investing in small caps aimed at identifying long term businesses
•    This small cap fund aims to generate alpha with a diversified portfolio of stocks
•    The scheme builds a portfolio keeping in mind risk and reward by containing mistakes and navigating volatile stock movements
•    Ideal for small cap investors who can patiently invest and those willing to absorb short term volatility
•    Axis Small Cap Fund is ideal for those with an investment horizon of 5 years or more

Is starting a SIP in Axis Small Cap Fund a smarter option?

A Systematic Investment Plan (SIP) is a simple and fitting way for investors to invest small fixed amounts at regular intervals in Axis Small Cap Fund. SIP is an ideal way to ensure that you save and invest regularly until your investment goal is attained. This type of investment approach is favoured by those who do not have surplus money to make a lumpsum investment.
What SIP does is that, over the years, it averages out the cost of purchase through an investment technique called rupee cost averaging. What happens is, since the NAV of a fund fluctuates from time to time, investors receive more units when the NAV is low and lesser units when the NAV is high. Rupee cost averaging accumulates more units over time and reduces the overall investment risk.
Axis Small Cap Fund
An open ended equity scheme predominantly investing in small cap stocks

 
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully