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Axis Equity – The flagship fund from Axis MF– for lower risk appetite
Wed, Sep 03, 2014
Source : Citrus Interactive

Axis Equity Fund is an open-end diversified equity fund that seeks to provide long term capital appreciation by investing in an actively managed portfolio of strong growth companies with sustainable business models. The fund is one of the flagship equity funds of Axis Mutual Fund with monthly average assets under management at Rs 983 crore, as on July 31, 2014. The fund was launched on January, 2010 and is benchmarked against the CNX Nifty.

 

Fund Performance

The fund has a good track record over the long term beating both the benchmark and category average returns. Although the performance of the fund is in line with the benchmark, it has lagged its category average significantly in the last one year.

Scheme Name

YTD

1-Year

3-Years

Since Inception

Axis Equity Fund

27.57

47.84

20.54

12.79

CNX Nifty

26.18

45.37

16.75

9.23

Category Average

38.18

68.52

20.16

NA

Rank

126/146

128/145

59/137

NA

  Figures are in % as on Aug 31, 2014; Figures above 1 year are in CAGR  terms

The fund has consistently outperformed its benchmark returns. The performance of the fund in Calendar Year 2013 was exceptional beating the benchmark and the category average by a wide margin.

 

 

2011

2012

2013

Axis Equity Fund

-22.55

31.73

13.49

CNX Nifty

-24.62

27.7

6.76

Category Average

-24.09

34.4

4.73

Rank

50/135

77/139

4/143

 

Portfolio Characteristics

Sector Concentration:  The fund’s concentration in the top three, five sectors and the top 10 sectors is much higher than the category median.

 

Top 3

Top 5

Top 10

Axis Equity Fund

43.09

55.17

71.85

Category Median

36.53

48.6

67.86

 

Company Concentration: Its concentration in top three, five and 10 companies in its portfolio is higher than the median for the category.

 

Top 3

Top 5

Top 10

Axis Equity Fund

21.1

31.71

46.24

Category Median

17.02

25.37

42.93

 

Risk Measures:  In terms of measures of risk such as standard deviation (average of the last three years) the fund has a lower level of risk compared to the category median whereas in terms of beta (average over last three years) the fund has a higher level of risk compared to the category median.

 

Standard Deviation

Beta

Axis Equity Fund

0.9431

0.8645

Category Median

0.9544

0.8255

  Figures are in % as on Jul 31, 2014

Risk adjusted Returns: The fund’s risk adjusted performance as measured by Treynor ratio and Sharpe ratio (measured as average of last three years) is better to the category median.

 

Sharpe

Treynor

Axis Equity Fund

0.0605

0.0597

Category Median

0.0515

0.0562

  Figures are in % as on Jul 31, 2014


Portfolio

Number of equity holdings:  As of July 31, 2014 the fund holds 50 stocks in its portfolio which is higher than the category median of 47 for the diversified equity category. Its average portfolio holdings since its inception is fairly diversified around 36 stocks.  The fund has increased its number of holding over last 6 months.

The fund intends to invest in a diversified portfolio of strong growth companies. The fund has invested in large & midcaps stock only. The top 5 holdings accounts for 32% of the portfolio comprising State Bank Of India, ICICI Bank Ltd, Infosys Ltd, HDFC Bank Ltd and Larsen & Toubro Ltd.

The fund’s exposure to cyclical stocks currently is 63.53%, followed by services with 22.42% and defensives around 9.35%. Currently the fund has cash holdings of 1.5% much lesser than the historical average.

The top 5 sectors in the portfolio had an allocation of 65% which is much higher than category median. The top 5 sector include Bank, Software, Auto, Pharmaceuticals and Construction projects. Banks have been the most favoured sector in the fund over the past three years.

 

Process

Axis Equity Fund is an open-end diversified equity fund scheme having asset allocation of 80-100% in equities and upto 20% in Debt/Money Market instruments. As per the Scheme Information Document, the fund will follow a bottom up approach of investing in stocks having appreciation potential based on their fair value/intrinsic worth. The fund will be an actively managed portfolio of stocks (across market capitalisation) consisting of strong growth companies with sustainable business models. Also the Investment Strategy is expected to be a function of extensive research and based on data and reasoning, rather than current fashion and emotion. The fund’s expense ratio is 2.43% which is lower than the category average of 2.54%. Like most equity funds the fund has an exit load of 1 per cent on or before one year from the date of investment. Minimum investment in the fund is Rs 5,000.

 

Fund Manager

The fund is currently being managed by Pankaj Murarka who has more than 14 years of experience in the financial market. Prior to joining Axis Equity Fund he has worked in Pipal Capital Management Private Limited, DSP Merrill Lynch Ltd, Rare Enterprise, Motilal Oswal Securities Ltd and UTI Asset Management Company. He also manages Axis Midcap Fund, Axis Small Cap Fund and Axis Enhanced Arbitrage Fund.

 

View

The fund has a good performance track record and has consistently beaten its benchmark CNX Nifty Index across all time frames. The fund performance has been good in a downward and stable market. However, the performance of the fund is subdued as compared to others in a rising market of last 1 year due to its tilt towards large cap stocks and less aggressive portfolio. Investors with lesser risk appetite and having large cap orientation can consider this fund. Investors with more aggressive stance towards portfolio and markets may need to look elsewhere.

 
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