In a market where investors are constantly balancing risk and reward, long-term wealth creation is the end goal. Mutual funds that promise a combination of consistency and growth often catch the eyes of investors, and one such investment option is the Nippon India Growth Fund.
It is known for its focus on mid-cap and emerging companies, and the fund has positioned itself as a potential wealth builder for patient investors. In this blog, we will discuss whether it remains an attractive investment option for long-term investors in 2025.
Overview of Nippon India Growth Fund
Nippon India Growth Fund is one of India’s oldest and largest mid-cap equity mutual funds, launched in 1995, and is managed through a bottom-up, research-driven approach. The fund primarily invests in mid-cap companies with scalable business models and promising growth, sometimes including large and small caps for a balance.
Its GARP strategy seeks growth stocks at reasonable valuations and thoughtful diversification across various sectors, which reduces the risk in the portfolio. With a fund size of ₹ 38385.96 Cr and a track record of consistent returns, the scheme promises patient investors an opportunity for long-term capital appreciation.
Benefits of Investing in Nippon India Growth Fund
Nippon India Growth Fund offers several benefits to investors. Some of those are:
Strong Mid-Cap Focus
Mid-cap companies offer significant growth potential to investors, often outperforming large caps over multiple cycles. By focusing on emerging and innovative businesses, the fund delivers impressive long-term returns for disciplined investors.
Experienced Fund Management
Nippon India Growth Fund is managed by a team of experienced professionals. Nippon India Growth Fund benefits from rigorous research and agile portfolio strategy, capitalizing on market opportunities and avoiding exposure to underperforming sectors.
Diversification Across Sectors
With investments spread across various sectors such as financial services, manufacturing, consumer goods, IT, and more, the equity funds reduce concentration risk and improve portfolio resiliency in volatile times.
Long-Term Wealth Creation
Over close to three decades, the fund has rewarded patient investors. Over the past five years, it has provided annualized returns of nearly 29%, far ahead of most mid-cap peers. Even a decade later, annual returns remain close to 18%, making it an attractive investment option.
What’s Holding It Back?
Below are some factors that investors should consider before investing in Nippon India Growth Fund:
Higher Volatility
Mid-cap funds are inherently more volatile, and short-term market fluctuations can affect investors’ net returns. Therefore, investors must have a high risk tolerance to avoid making emotional decisions.
Cyclical Nature of Mid-Caps
Performance may fluctuate during economic slowdowns, as mid-caps are more sensitive to demand cycles and industry risks.
Peer Competition
With many high-performing mid-cap funds trying to attract attention, Nippon India Growth Fund is in stiff competition and needs to keep evolving in order to stay relevant.
Expense Ratio
Active management of Nippon India Growth Fund comes with a higher expense ratio of 1.55% which is way more than passive managed funds, which can eat into net returns over time.
Should Long-Term Investors Consider It?
The Nippon India Growth Fund is ideal for aggressive investors with a long investment horizon (preferably more than five years) and a high risk tolerance.
Its growth-focused strategy is most likely to benefit investors who are tolerant of market volatility and committed to staying with it through different market cycles.
Investors with a long investment horizon find the fund more appealing due to its strong sectoral diversification and historical performance. By investing in the Nippon India Growth Fund, SIP investors can also take advantage of rupee cost averaging and gradual generation of long-term returns.
Conclusion
The Nippon India Growth Fund is a popular option among investors due to its previous performance, active management, and focus on scalable businesses. It is an attractive investment option for long-term investors who are looking for substantial capital gains and are willing to ride out market fluctuations.
Ultimately, investing in the Nippon India Growth Fund depends on individual investors’ financial objectives, risk tolerance, and investment horizon.