Axis Global Equity Alpha FoF – NFO review

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Axis Mutual Fund has come out with a New Fund Offer for Axis Global Equity Alpha FoF with an aim to provide investors an option to diversify in a portfolio of global equities. With this, Axis MF also makes a foray into a dedicated fund for international investing.

Hitherto, Axis Growth Opportunities Fund (a large and mid cap category fund) had a mandate to invest upto 35% of its corpus internationally.

Now you have heard enough about why to invest globally with ideas such as % of GDP shares for countries, specific opportunities, low correlation between India and outside world, etc.

So, we cut to the chase and see what the new fund has to offer.

Key features of the Axis Global Equity Alpha F0F

  1. The fund is a global fund and not limited to a particular geography. It seeks to invest around the world. 65% of the current exposure is in North America, while Continental Europe and UK combined is at 25%. (PGIM Global is a similar fund. Here is the review note on it)
  2. It is a feeder fund, which means all investor money will be further invested into the Schroder’s ISF Global Equity Alpha Fund*, which in turn will invest in individual stocks. This is how feeder funds including Franklin India Feeder – Franklin US Opportunities Fund function.
  3. Schroder’s ISF fund has existed since 2005 and hence has significant experience under the belt. It manages about USD 1.6 billion currently. Schroders is also part of the JV that owns Axis Asset Management Company Limited.
  4. The fund will be benchmarked to MSCI World Net Total Return Index (INR).
  5. The fund structure makes it eligible for debt type taxation. For resident investors, it is 20% with indexation (after 3 years of holding) and as per tax bracket for a lesser period.
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*Note: Axis Growth Opportunities Fund also uses the same Schroder’s fund to invest internationally.

You can download and read the fund offer presentation.

Should you invest in this fund?

The only reason you have to invest in this fund is its global nature. While most other international funds, tend to focus just on the US (example, Franklin Feeder US Opportunities) or Motilal Oswal S&P 500 or Nasdaq 100, this fund invests across countries.

However, the fact is that 65% of the money is invested in North America. All Top 10 holdings are companies listed in the US.

As per its Alpha strategy, the fund aims to have about 40 to 60 stocks with a max 5% allocation to any stock. A concentrated portfolio and yet limited exposures, is likely to help manage the volatility better. Note, this comes at a cost to returns. The fund presentation will confirm that.

The irony is that most investors who look to invest internationally are driven by higher returns and not diversification aka lowering portfolio volatility.

So, if higher returns is what you seek, you are going to be disappointed.

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Know that before you invest your money.

Unovest readers are aware of the fund that provides international diversification, focuses on capital preservation and is taxed as an equity fund.

If you don’t know yet, download the 5 investment ideas guide.

Insider MF portfolios have allocation to international funds. If you are looking to build your own portfolio for wealth preservation or growth, become a member and check them out.

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Vipin Khandelwal
Vipin is a SEBI Registered Investment Adviser. He works with investors to make better decisions and create behaviour alpha.
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