BOI Axa Equity Fund: Not suitable for risk averse investors

BOI Axa Equity Fundearlier known as Bharti Axa Equity Fund is an open-ended fund primarily investing in equity and equity-related securities with different market capitalisation. Since inception, the fund has remained an underperformer against its benchmark index for most of the period. According to Arnav Pandya, investors with conservative outlook should stay away from this fund.

Nature: Equity oriented open ended

Inception: October 2008

Assets under management: Rs 53 crore at the end of March 2013

Fund Manager: Gaurav Kapur

Analysis

• The fund which invests in large cap stocks and was earlier called Bharti Axa Equity Fund before the entry of BOI Mutual fund. It had the highest exposure to financial services at nearly 20 percent of the portfolio at the end of May 2011. Energy and IT were the other two sectors where the share was 15 percent each while consumer goods had a share of 9 percent. The fund had a massive portfolio turnover ratio of 3.8 times. The fund had nearly 6 percent of the portfolio in cash and current assets. The top individual stock in the portfolio was Reliance Industries with Infosys, ITC, ICICI Bank, TCS, HDFC Bank, HCL Tech and SBI being some of the other leading holdings. The CNX Nifty was the benchmark index and the fund was an underperformer over the one-year period and also since inception.
• Six months later, the position had not changed much on the sector front as financial services remained the top sector with a 19 percent share. Energy, consumer goods and IT were three other areas where the exposure was in the 14-16 percent range.  The portfolio turnover ratio had dropped to 1.7 times. Infosys was the top individual holding with a 9 percent share. ITC, Reliance Industries, ICICI Bank, HDFC Bank, Bharti Airtel, TCS, SBI and L&T were some of the other leading stocks in the portfolio. The fund was a slight underperformer over the one year period ended September 2011 and also since inception.
• The process of stability in the management of the portfolio continued and the portfolio turnover ratio dropped to below 0.9 times at the end of May 2012. There was however a concentration of the holdings as the share of financial services in the portfolio went up to 29 percent. Energy and consumer goods were the only two other areas where the share was more than 10 percent with IT just slipping below this mark.  ITC was the top individual holding with  a 8 percent share.  HDFC bank, Reliance Industries, HDFC, ICICI Bank, SBI and Infosys were some of the other top holdings. The fund was a slight outperformer over the one year period and an underperformer over the three year period ending March 2012.
• Six months later, there was an increase in the concentration in the portfolio. Financial services now made up 33 percent of the total portfolio with consumer goods far behind at 13 percent. Energy and Pharma were two other major areas in the portfolio. The portfolio turnover ratio was 0.67 times. HDFC bank with a 10 percent share was the top holding in the portfolio. ITC, HDFC, ICICI Bank, L&T, SBI, Infosys, Reliance Industries and HUL were some of the other top stocks. The fund was an underperformer over the one and three year time periods ending September 2012.
• The fund continued with its portfolio strategy and at the end of April 2013 the financial services area had an exposure of 34 percent in the portfolio. IT, Pharma and energy were three other areas with a significant share. ICICI Bank was now the top individual holding with an 8 percent share followed by HDFC Bank, Reliance Industries, Infosys, ITC, SBI, Tech Mahindra, NTPC, HDFC and Axis bank. The fund was an underperformer over the one and three year time periods ended March 2013.
• Conservative Investors looking for an exposure to the large cap space can look at other alternatives for their requirements. They should look for consistency in performance that sustains over a longer period of time.