{"id":1367,"date":"2019-12-07T00:00:12","date_gmt":"2019-12-07T00:00:12","guid":{"rendered":"https:\/\/blog.certifiedfinancialguardian.com\/?p=1367"},"modified":"2019-12-07T07:29:45","modified_gmt":"2019-12-07T07:29:45","slug":"principal-midcap-fund-should-you-invest","status":"publish","type":"post","link":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/2019\/12\/07\/principal-midcap-fund-should-you-invest\/","title":{"rendered":"Principal Midcap Fund: Should You Invest?"},"content":{"rendered":"\n

The recent corporate tax rate cut did boost the Inc’s earnings of several heavyweights of bellwether index\u2013the Nifty 50\u2014which were in line with street expectations or have beat the estimates, in turn reviving the market sentiment.<\/p>\n\n\n\n

[Read<\/strong>: How to Make the Most of Market High With Best Mutual Funds<\/a>]<\/em><\/p>\n\n\n\n

A correction is seen in Midcap space and this offers a value buying opportunity. So, among several fund houses,Principal Mutual Fund<\/a> launched Principal Midcap Fund because it sees this as an opportunity to create wealth for investors.<\/p>\n\n\n\n

The fund house is of the view that Midcaps have the potential to generate wealth. Midcaps are basically sweet spots; they are leaders in small sectors that will grow to be a future large cap<\/a>. Hence despite the short-term volatility, they are better multipliers in the long term.<\/p>\n\n\n\n

Image 1: Midcaps are sweet spots<\/em><\/strong><\/p>\n\n\n\n

\"\"\/
(Source: Principal Midcap Fund Presentation<\/a>) <\/figcaption><\/figure><\/div>\n\n\n\n

Principal Midcap Fund is an open-ended equity scheme that will invest predominantly in midcap stocks.
As per SEBI’s categorisation norms, an equity-oriented<\/a> scheme is characterized as a midcap<\/a> fund only if it invests a minimum of 65% of its total corpus in equity & equity related instruments of midcap stocks (i.e. companies from 101st to 250th on full market capitalisation basis).
But being an equity scheme this fund does carry extreme risk. On the risk-return spectrum, it is placed below Small-Cap<\/a> and Thematic funds.<\/p>\n\n\n\n

[Read<\/strong>:  How to evaluate your risk appetite and risk tolerance level?<\/a>]<\/em><\/p>\n\n\n\n

Thus, invest if you have the stomach for moderately high-risk appetite and investment time horizon of at least 5 years, then you may skew your equity portfolio to a midcap fund.<\/p>\n\n\n\n

Table 1:  Details of Principal Midcap Fund<\/em><\/strong><\/p>\n\n\n\n

\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t<\/tr>\n\t\t\n\t\t\t
Type<\/b><\/td>\n\t\t\tAn open-ended equity scheme predominantly investing in mid-cap stocks<\/td>\n\t\t\tCategory<\/b><\/td>\n\t\t\tMidcap Fund<\/td>\n\t\t<\/tr>\n\t\t
Investment Objective<\/b><\/td>\n\t\t\tTo generate long term capital appreciation by predominantly investing in equity and equity related instruments of midcap companies.
\n\t\t\tHowever, there is no assurance or guarantee that the investment objective of the scheme will be achieved.<\/td>\n\t\t<\/tr>\n\t\t
Min Investment<\/b><\/td>\n\t\t\tRs 5,000 and in multiples of Re 1 thereafter<\/td>\n\t\t\tFace Value<\/b><\/td>\n\t\t\tRs 10 per unit<\/td>\n\t\t<\/tr>\n\t\t
Plans<\/b><\/td>\n\t\t\t\n\t\t\t
    \n\t\t\t\t
  • Direct<\/li>\n\t\t\t\t
  • Regular<\/li>\n\t\t\t<\/ul>\n\t\t\t<\/td>\n\t\t\t
Options<\/b><\/td>\n\t\t\t\n\t\t\t
    \n\t\t\t\t
  • Growth<\/li>\n\t\t\t\t
  • Dividend (Pay-out, Reinvestment and Sweep)<\/li>\n\t\t\t<\/ul>\n\t\t\t*Default option<\/td>\n\t\t<\/tr>\n\t\t
Entry Load<\/b><\/td>\n\t\t\tNil<\/td>\n\t\t\tExit Load<\/b><\/td>\n\t\t\tIf redeemed\/ switched on or before 365 days from the date of allotment:\n\t\t\t
    \n\t\t\t\t
  • Nil for redemption\/ switch out of units upto 20% of the units allotted (the limit)<\/li>\n\t\t\t\t
  • 1% on redemption in excess of 20% of the limit stated above- Redemption of units would be done on First in First out Basis (FIFO)<\/li>\n\t\t\t<\/ul>\n\t\t\t<\/td>\n\t\t<\/tr>\n\t\t
Fund Manager<\/b><\/td>\n\t\t\tMr Ravi Gopalakrishnan and Mr Sudhir Kedia<\/td>\n\t\t\tBenchmark Index<\/b><\/td>\n\t\t\tNIFTY Midcap 100 Index – TRI<\/td>\n\t\t<\/tr>\n\t\t
Issue Opens:<\/b><\/td>\n\t\t\tDecember 06, 2019<\/td>\n\t\t\tIssue Closes:<\/b><\/td>\n\t\t\tDecember 20, 2019<\/td>\n\t\t<\/tr>\n\t<\/tbody>\n<\/table>\n<\/div>\n\n\n\n

(Source: Scheme Information Document<\/a>)<\/p>\n\n\n\n

How will the scheme allocate its assets?<\/strong><\/p>\n\n\n\n

Under normal circumstances, it is anticipated that the asset allocation of PMF will be as follows:<\/p>\n\n\n\n

Table 2: PMF ‘s Asset Allocation<\/em><\/strong><\/p>\n\n\n\n

\n\n\t\n\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t\n\t\t\t
Instrument<\/b><\/td>\n\t\t\tIndicative Allocation(% of net assets)<\/b><\/td>\n\t\t\tRisk Profile<\/b><\/td>\n\t\t<\/tr>\n\t\t
Minimum<\/b><\/td>\n\t\t\tMaximum<\/b><\/td>\n\t\t\tHigh\/Medium\/Low<\/b><\/td>\n\t\t<\/tr>\n\t\t
Equity and equity related instruments of midcap* companies<\/td>\n\t\t\t65<\/td>\n\t\t\t100<\/td>\n\t\t\tHigh<\/td>\n\t\t<\/tr>\n\t\t
Equity and equity related instruments of companies other than midcap companies<\/td>\n\t\t\t0<\/td>\n\t\t\t35<\/td>\n\t\t\tHigh<\/td>\n\t\t<\/tr>\n\t\t
Debt and Money Market Instruments including units of debt & liquid schemes<\/td>\n\t\t\t0<\/td>\n\t\t\t35<\/td>\n\t\t\tLow to Medium<\/td>\n\t\t<\/tr>\n\t<\/tbody>\n<\/table>\n<\/div>\n\n\n\n
\n *The fund will predominantly invest in Mid cap stocks. In terms of SEBI circular SEBI\/ HO\/ IMD\/ DF3\/ CIR\/ P\/2017\/ 114 dated October 6, 2017, the universe of \u201cMid Cap\u201d shall consist of 101st -250th company in terms of full market capitalization and that the Scheme will be required to adhere the following: \n \n \n