Should I Invest in Axis Long Term Equity Fund?

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About Fund House

Axis Mutual Fund was launched in October 2009. It is a joint venture between Axis Bank Limited (75% shareholder) & Schroder Plc (25% shareholder). Schroder’s group investment management is their only business and their goals are completely aligned with those of their clients – the creation of long-term value to assist them in meeting their future financial requirements.

Schroder Plc manages US$662.6 billion on behalf of institutional and retail investors, financial institutions and high net worth clients from around the world, invested across equities, fixed income, multi-asset, private assets and alternatives.

Market share of company (% of total industry AUM)

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020  
0.5% 1.2% 1% 1.5% 1.8% 2.2% 2.8% 3.1% 3.4% 3.7% 5.1%  

About Axis Long Term Equity Fund

The fund has 93.44% investment in Indian stocks of which 62.94% is in large cap stocks, 16.49% is in mid cap stocks, 5.66% in small cap stocks. The fund is an ELSS (Equity Linked Savings Scheme). It is suitable for investors who have a time horizon of 5-7 years. It has an AUM of ₹20,300 cr.

ELSS scheme – in an ELSS scheme there is a tax benefit. Under Section 80C of the Indian income tax laws, investments of up to Rs 1.5 lakh in a financial year in eligible securities such as this fund are exempt from tax.

Along with a tax benefit when to invest you also get equity exposure. Also note that you cannot withdraw your money from this fund before completing three years from the date of investment.              

A ₹10,000 investment 5 years ago would now be worth ₹15094 today & ₹1000 monthly SIP for last 5 years your ₹60,000 would have been ₹73424 (As on July, 2020).

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Investment Philosophy

The fund is focused on long term earnings growth prospects and quality as key criteria for stock selection. The fund invests across market cap – Large caps around 50-100% and midcaps up to 50%. The focus is on investing in quality businesses for the long term through bottom up stock picking.

The ultimate investment objective of the scheme is to generate income and long-term capital appreciation from a diversified portfolio of predominantly equity and equity-related securities.

Fund Manager

The fund is managed by Mr. Jinesh Gopani.

Education: Mr. Gopani is a B. Com (H) and MMS from Bharati Vidyapeeth Institute of Management Studies and Research.

Experience: Prior to joining Axis AMC he has worked with Birla Sun Life AMC, Voyager India Capital Pvt. Ltd., Emkay Shares & Stock Brokers Limited and Net worth Stock Broking Limited.

Other funds managed: Axis Focused 25 Fund, Axis Emerging Opportunities Fund, Axis Growth Opportunities Fund, Axis Retirement Savings Fund, Axis Retirement Savings Fund, Axis ESG Equity Fund

Portfolio of Axis Long Term Equity Fund

TOP 10 HOLDINGS
Company Sector % Assets
Avenue Supermarts Services 7.41
HDFC Bank Financial 7.39
Bajaj Finance Financial 6.89
Kotak Mahindra Bank Financial 6.88
Tata Consultancy Services Technology 6.43
Nestle India FMCG 5.76
Maruti Suzuki India Automobile 5.63
Info Edge (India) Services 5.31
HDFC Financial 4.47
Torrent Power Energy 4.22

(SOURCE – valueresearch, As on 30-Jun-2020)

(SOURCE – valueresearch)

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Concentration & Valuation
Number of Stocks 37
Top 10 Stocks (%) 60.39
Top 5 Stocks (%) 35
Top 3 Sectors (%) 56.15
Portfolio P/B Ratio 4.69
Portfolio P/E Ratio 29.92

(SOURCE – valueresearch)

Returns

One-time investment return (absolute)

Period (Returns (in %) 1 Year 3 Year 5 Year 10 Year
DSP Tax Saver Fund – Regular Plan – Growth 0.97% 6.95% 42.84% 178.18%
Axis Long Term Equity Fund – Regular Plan – Growth 2.89% 19.98% 50.94%
Tata India Tax Savings Fund – Regular Plan – Growth -2.54% 4.48% 43.04%
Aditya Birla Sun Life Tax Relief 96 – Regular Plan – Growth 4.18% 6.97% 37.74% 162.75%

SIP Returns (absolute)

Period (Returns (in %) 1 Year 3 Year 5 Year 10 Year
DSP Tax Saver Fund – Regular Plan – Growth 2.62% 2.85% 16.02% 82.39%
Axis Long Term Equity Fund – Regular Plan – Growth -0.22% 5.66% 22.37%
Tata India Tax Savings Fund – Regular Plan – Growth 1.07% 0.13% 13.78%
Aditya Birla Sun Life Tax Relief 96 – Regular Plan – Growth 2.97% 0.23% 13.71% 81.26%
(SOURCE – moneycontrol, As on July,2020)

5 YEAR RETURN COMPARISON

(SOURCE – valueresearch)

 Expense Ratio

  Expense ratio (Regular) Expense ratio (Direct)
DSP Tax Saver Fund – Regular Plan – Growth 1.90% 0.95%
Axis Long Term Equity Fund – Regular Plan – Growth 1.73% 0.92%
Tata India Tax Savings Fund – Regular Plan – Growth 2.31% 0.76%
Aditya Birla Sun Life Tax Relief 96 – Regular Plan – Growth 1.92% 92.00%

Risk Elements

Key person risk – There is only single fund manager running the fund as compared to other funds where generally 2 managers manage the fund.

Removal of tax benefit – Currently if one invests in an ELSS one gets tax benefit under section 80C, but as government intention to move to lesser tax benefit the fund AUM can be affected.

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Should I Invest in Axis Long Term Equity Fund?

The fund has been historically successful in generating returns better than the peers as the funds invested can’t be withdrawn for 3 years, hence can take positions stocks other than large caps as it doesn’t have much liquidity rules due to lock in imposed.

If one is looking for an ELSS fund which provides tax benefit & better returns one can go for it as a part of mutual fund portfolio.

Similar Mutual Funds

DSP Tax Saver Fund – Regular Plan – Growth –

The fund has 93.35% investment in Indian stocks of which 59.41% is in large cap stocks, 16.55% is in mid cap stocks, 9.28% in small cap stocks. The fund is managed by Mr. Rohit Singhania. Mr. Singhania is an MMS. Prior to joining DSPBR AMC he has worked with HDFC Securities Ltd. and IL&FS Investsmart Limited.

A ₹10,000 investment 5 years ago would now be worth ₹14284 today & ₹1000 monthly SIP for last 5 years your ₹60,000 would have been ₹69612 (As on July, 2020).

Tata India Tax Savings Fund – Regular Plan – Growth –

The Fund has 98% investment in Indian stocks of which 75.88% is in large cap stocks, 8.14% is in mid cap stocks, 4.87% in small cap stocks. The fund is managed by Ms. Ennette Fernandes & Mr. Rupesh Patel. Ms. Fernandes is B.com & PGDBM & prior to joining TATA Mutual Fund she has worked with Phillip Capital India Pvt. Limited as Junior Research Analyst on FMCG sector.

Mr. Rupesh is a B.E.(Civil) and MBA (Finance). He served as the Tata Asset Management Limited’s Principal Officer of PMS from January 2012 to June 2013. Mr. Patel was the Deputy General Manager of Investments at the Tata Asset Management Limited from May 2008 to January 2012.

Prior to this, he served as an Assistant Vice President of Investments at Indiareit Fund Advisors Pvt. Ltd. from August 2007 to April 2008. He was a Deputy General Manager at Credit Analysis & Research Ltd. until August 2007. Mr. Patel served as an Analyst and Manager at the Credit Analysis & Research. He had joined the Credit Analysis & Research in November 2001.

A ₹10,000 investment 5 years ago would now be worth ₹14304 today & ₹1000 monthly SIP for last 5 years your ₹60,000 would have been ₹68268 (As on July, 2020).

Aditya Birla Sun Life Tax Relief 96 – Regular Plan – Growth

The fund has 97.69% investment in Indian stocks of which 40.79% is in large cap stocks, 44.04% is in mid cap stocks, 8.03% in small cap stocks. The fund is managed by Mr. Ajay Garg. Mr. Garg is B.E (Electronics) and MBA (Finance). Prior to joining Birla Sun Life AMC in 2003 he has worked with Birla Sun Life Securities Ltd.

A ₹10,000 investment 5 years ago would now be worth ₹13774 today & ₹1000 monthly SIP for last 5 years your ₹60,000 would have been ₹68223 (As on July, 2020).



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Prateek Goel
Co-founder of Investeek, Prateek has been investing in the stock markets since 2006 and has beaten the NSE/BSE on a consistent basis. At the age of 24, he was also featured in India Today for his expert insight on gold trading.
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