BOI AXA Midcap Tax Fund Series 2 – Should you invest?
Mutual Fund AMCs has started floating unique mutual fund schemes to attract mutual fund investors. BOI Axa has launched BOI AXA Midcap Tax Fund Series 2 in Midcap segment, which offers even tax benefit. This mutual fund scheme invests in mid cap stocks and related equity instruments along with providing income tax benefit u/s 80C upto Rs 1.5 Lakhs. This is unique mutual fund scheme which is combination of midcap fund and ELSS fund. Currently midcap and smallcap stocks are still taking beating. We could see this in midcap / smallcap funds performance. Under this uncertainity, should you invest in BOI AXA Midcap Tax Fund Series 2? What are the risk factors an investor should consider before investing in Series 2 of BOI AXA Midcap Tax Mutual Fund Scheme?
Features of BOI AXA Midcap Tax Fund Series 2
This is a close ended mutual fund scheme that invests in equity and equity related instruments of mid cap companies along with income tax benefit u/s 80C of the Income Tax Act, 1961 upto Rs 1.5 Lakhs.
This scheme would open for subscription on 12th July, 2018.
This scheme closed for subscription on 11th October, 2018 (3 month period)
This is close ended mutual fund scheme, hence it would not reopen for subscription further.
This scheme would close and mature 10 years time frame.
This scheme is termed as Midcap ELSS Fund as it provides tax benefits.
Though this is close ended scheme, it lock-in period of 3 years and you can redeem them after this period.
This scheme is available in both regular and direct plans.
Like any other MF scheme, each such plan offers both dividend and growth options. Under the dividend option regular dividends would be paid.
This scheme is available for lump sum only. No SIP option available.
Minimum investment is Rs 500 and in multiples of Rs 10 thereof.
There is no maximum amount of investment.
The NAV of the NFO is Rs 10 per unit now.
This scheme is classified as moderately high risk scheme.
This scheme benchmark is a Nifty Midcap 100 TRI.
There is no entry or exit load.
Scheme expense ratio is estimated up to 2.5% of the total assets on any day.
Who is the Fund Manager of BOI AXA Midcap Tax Fund Series 2?
The Fund Managers are Mr. Saurabh Kataria. He has more than 12.5 years of experience.
What is the investment objective and strategy of BOI AXA Midcap Tax Fund Series 2?
The scheme seeks to generate capital appreciation over a period of 10 years by investing predominantly in equity and equity-related securities of mid cap companies along with income tax benefit. However, there is no assurance that the investment objective of the Scheme will be realized and the Scheme does not assure or guarantee any returns.
What is the allocation pattern in this mutual fund scheme?
This fund investment pattern looks as follows:
1) It invests 65% to 100% in Mid Cap Equity & Equity Related Securities such as cumulative convertible preference shares and fully convertible debentures and bonds of companies, etc. This risk profile in this segment is High.
2) It invests 0% to 35% in Other Equity & Equity Related Securities such as cumulative convertible preference shares and fully convertible debentures and bonds of companies, etc. This risk profile in this segment is High.
3) It invests 0% to 35% in Debt and Money Market Instruments. This risk profile in this segment is low to medium.
Mid-caps are defined as 101st to the 250th company in terms of full market capitalisation. The AMC will adopt the list of stocks prepared by AMFI in this regard.
The scheme shall not invest in Derivatives.
The Scheme shall not invest in Securitized Debt.
The Scheme shall not invest in ADR/GDR/Foreign securities.
The Scheme shall not engage in stock lending.
The Scheme shall not engage in Short selling.
The Scheme shall not invest in repo in corporate debt.
Where would this Mutual Fund Scheme invest?
Here is how the scheme invests.
1) The corpus of the Scheme shall be predominantly invested in equity and equity related instruments as may be permitted under the Regulations and the ELSS Rules from time to time.
2) Investments in units of Mutual Fund Schemes.
3) Under normal market conditions, BOI AXA Midcap Tax Fund – Series 2 would invest 65% to 100% of its assets in a diversified portfolio constituting equity and equity related instruments of mid cap companies that the Fund Manager believes have sustainable business models, and potential for capital appreciation.
4) Invest in debt and money market instruments.
Can NRI invest in this MF scheme?
Yes, Non-Resident Indians (NRIs) / Persons of Indian Origin (PIO,) can invest on full repatriation basis or on non-repatriation basis.
However, Non-Resident Indians residing in Non-compliant Countries and Territories (NCCTs) as determined by the Financial Action Task Force (FATF), from time to time and NRIs and PIOs who are residents of the United States of America and /or United States Person as defined under U.S. law(s) and the residents of Canada cannot invest in this scheme.
What are the risks involved in this fund?
One should consider some of these risk factors before investing.
1) This scheme invests in Midcap sector, which is very high risk. There are chances that your capital would get eroded.
2) This scheme invests in cumulative preference shares/fully convertible debentures, etc., and there are liquidity restrictions.
3) This is close ended mutual fund scheme which closes in 10 years. Investors should prefer open ended mutual fund schemes compared to close ended schemes as they can hold for few more years in case of nonperformance during that maturity time.
4) There is a lock-in period of 3 years, hence you cannot liquidate them before this lock-in period.
How is the Performance of Series 1 of BOI Axa Midcap tax Fund?
Series 1 was launched more than 7 months back and let us look at the performance
1) This mutual fund scheme was launched in Nov-2017 and subscribed for Rs 97 Crores.
2) This fund gave 1.5% negative returns in the last 1 year compared to its benchmark negative returns of 1.1%.
3) This fund gave 7.1% negative returns in the last 3 months compared to its benchmark negative returns of 6.5%.
Should you invest in BOI AXA Midcap Tax Fund Series 2?
Midcap sector is one of the best sectors to invest, especially in medium to long run. Several Midcap stocks turned to multibaggers and investors minted money. However, the mid cap sector is high risk. There are already several Midcap funds that have performed well earlier, however beaten up in the last 4-6 months as entire sector is down. I feel investors can pick-up some of the best Midcap funds from existing schemes and invest in them. They can keep tax saving aspect separately. If you want to invest in tax saving funds, there are several good ELSS tax scheme funds which you can opt it.
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BOI AXA Midcap Tax Fund Series 2 New Fund Offer