Helios Mid Cap Fund: Is It the Right Bet Amidst Market Volatility?

Helios Mutual Fund has launched Helios Mid Cap Fund, it is an open-ended equity scheme predominantly investing in mid cap stocks.

The mid-cap segment has experienced significant volatility in recent months after a strong rally over the past year. While mid-cap stocks had delivered impressive returns in the bullish phase, concerns over stretched valuations, global economic uncertainties, and rising interest rates have triggered a market correction.

Despite the recent downturn, mid-cap stocks remain an attractive long-term investment option due to their potential for high growth, backed by India's economic expansion and policy-driven initiatives.

[Read: 5 Mid Cap Funds Down by Over 15% in the Recent Market Correction]

Amid this volatile environment, Helios Mutual Fund has launched its Helios Mid Cap Fund NFO, aiming to tap into the opportunities in the mid-cap space. The timing of this launch is noteworthy, as the market correction presents a potential entry point for investors looking to gain exposure to mid-cap stocks at relatively better valuations.

What will be the investment strategy for Helios Mid Cap Fund?

Helios Mid Cap Fund will be managed actively, it aims to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related securities of mid-cap companies.

While allocating and choosing securities, the Investment Manager will aim to diversify by gaining broad exposure to different industries and companies in order to reduce risk. The fund is likely to emphasize businesses with high earnings visibility, strong cash flows, and quality management teams.

Eliminating stocks with conviction based on (eight) fundamental screening factors, has repeatedly proven to be effective in weeding out poor performers, gravitating towards winners, and creating a sustainable outperformance profile.

Additionally, the fund managers will focus on prudent sectoral diversification, in order to mitigate downside risks. Leveraging Helios Mutual Fund's global investment expertise, the fund could identify high-potential companies that are temporarily mispriced due to market inefficiencies.

Given the inherent volatility in the mid-cap segment, risk management and prudent stock selection will be critical in delivering superior risk-adjusted returns.

How will the scheme allocate its assets?

Under normal circumstances, Helios Mid Cap Fund will hold an allocation of 65% to 100% in Equity & Equity related instruments of Mid cap companies, 0% to 35% in Equity and equity related instruments of companies of other than mid cap companies and 0% to 35% in Debt Securities and Money Market Instruments.

Should investments in Helios Mid Cap Fund be considered?

Helios Mid Cap Fund has recently gained attention among investors looking for high-growth opportunities in the mid-cap segment.

The scheme allows investors an opportunity to tap into mid cap stocks that tend to be more agile and adaptable compared to larger counterparts, allowing them to quickly capitalize on new trends, technologies, or market shifts. Midcap stocks could offer an excellent way to diversify your portfolio by adding a mix of growth stocks that are relatively riskier than large caps but less volatile than small caps.

Currently, the Indian equity market is going through a phase of heightened volatility due to multiple factors such as geopolitical tensions, fluctuating interest rates, and global economic uncertainties. The mid-cap segment has seen a sharp correction recently after a sustained rally over the past year. Mid-cap stocks, in particular, are more sensitive to market corrections and tend to experience sharper fluctuations compared to large-cap stocks.

This makes short-term investments in mid-cap funds riskier, especially when markets are uncertain. Investors must be prepared for periods of underperformance and not get swayed by short-term returns.

Historically, mid-cap funds have outperformed large-cap funds over the long term. Companies in the mid-cap segment have the potential to become tomorrow's large caps, offering superior growth. However, patience is key, as mid-cap stocks require time to realize their full potential.

Being an actively managed fund its ability to pick fundamentally strong stocks and manage downside risks will be crucial in determining its performance over the long run. Investors considering Helios Mid Cap Fund should have a long-term horizon of at least 5-7 years to reap the benefits of compounding and mitigate the impact of short-term market fluctuations.