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Lump-sum investments in Axis Mid Cap Fund

Ashutosh Gupta highlights the factors that should be considered before making lump-sum investments.

How about a lump-sum investment in Axis Mid Cap Fund for an investment horizon of seven or more years? It is over and above my SIP in the same fund.
- Shubha Malviya

I would like to point out a few things. Firstly, the choice of fund is fine but investing a lump sum is an undesirable way to invest in this fund. Since this is a mid-cap fund, it may be subjected to a greater level of volatility through the ups and downs of the market. So, one should look to spread one's lump-sum amount over at least a few months to maybe even a couple of years, depending upon the size of the amount in the context of one's finances.

Secondly, I generally avoid suggesting a mid-cap fund for an investment horizon of less than 10-12 years. So, if your investment horizon is strictly seven years, you should rather consider flexi-cap funds, which by themselves have limited exposure to mid- and small-cap stocks and that should be good enough.

Finally, I would suggest that if you have already decided to invest in this fund, then you should look at this as a supplementary allocation and do not invest a substantial portion of your overall portfolio in this fund. Thus, an allocation to the tune of not more than 10-15 per cent should be good enough. These are the considerations that you should keep in mind.

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