‘Axis Long Term Equity Fund review: A consistent performer’

By: | Updated: July 11, 2016 11:28 AM

Axis Long Term Equity Fund has been one of our recommended tax saving funds since 2013 and till date continues to clear all the filters in our model. The fund was launched in December 2009 and is being managed by Jinesh Gopani since April 2011.

Mutual fund axis long termAxis Long Term Equity Fund has been one of our recommended tax saving funds since 2013 and till date continues to clear all the filters in our model. The fund was launched in December 2009 and is being managed by Jinesh Gopani since April 2011.(Reuters)

Axis Long Term Equity Fund has been one of our recommended tax saving funds since 2013 and till date continues to clear all the filters in our model. The fund was launched in December 2009 and is being managed by Jinesh Gopani since April 2011.

The fund’s mandate is to invest into quality businesses while having the flexibility to get into stocks across the market capitalisation spectrum. Here, quality businesses refer to superior business models with sustainable growth potential, have a competitive advantage in the sector with sound management that have the expertise to sail the company through the different market cycles.

All of these should finally create wealth for investors in the long run. The stock selection is done with the help of the bottom up approach. However, the fund manager will make sure that stocks belonging to highly cyclical and regulated sectors are completely kept off the portfolio.

Although Axis Long Term Equity Fund is positioned as a multi cap tax saving fund, it has been pre-dominantly biased towards the large cap space. During the period of study (June 2013 to May 2016), an average around 71 per cent of the surplus has been parked into large caps, while the average mid cap and small cap exposure has been to the tune of 23 per cent and 3 per cent respectively.

We have also noticed that the number of stocks has come down from 42 in June 2013 to 36 by May 2016. The portfolio is constructed in a very concentrated manner as can be seen from the fact that on an average around 51 per cent of the surplus is parked into the top 10 holdings of the fund during the entire period of study. As on May 2016, out of 36 stocks in the portfolio, 23 of them have been held continuously for 3 years.

This in short means that Gopani has been following a buy and hold strategy while picking up stocks in the portfolio. The 23 stocks are scattered across the market capitalisation curve which means that Gopani is holding onto some of the mid caps and small caps with the hope that they will not just deliver superior returns but also have the capability to become large caps in the near future. Coming to the sector analysis, since June 2014, the top 5 sectors of this fund have been banks, finance, auto ancillaries, pharmaceuticals and computers.

Performance
If an Investor had parked Rs 10,000 in Axis Long Term Equity Fund and the benchmark, S&P BSE 200 on June 3, 2013, the surplus would have become Rs 20,393 and Rs 14,362 respectively as on May 31, 2016.

Why are we positive about the Fund?
A fund whose focus has been on picking up quality businesses has proved to be a consistent performer across the different time periods. The biggest USP of this fund is the prudent stock selection which is based on rigorous research and is completely in sync with the investment strategy mentioned in the Scheme Information Document (SID). The buy and hold strategy being followed in the fund, along with the fact that the captain of the ship does not get carried away by the ups and downs in the stocks held in the portfolio, gives us the confidence in recommending this fund to our investors. Although this fund is positioned as an ELSS, we can safely include this as a part of the core portfolio of investors.

(The author is research head at Fundsupermart.com)

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