Moneycontrol
Last Updated : Sep 25, 2018 03:03 PM IST | Source: Moneycontrol.com

Axis Long Term Equity Fund review: Steady performer in ELSS category for tax-saving

The fund's current alpha is among the highest in the category, which means it will typically do quite well when markets perform.

Hiral Thanawala @thanawala_hiral
Review fund managers skills | First, evaluate the past performance of the fund manager with their respective benchmarks and check if they have performed fairly. Next, having done with the evaluation of the fund manager, check what is the broader investment style of the scheme.
Review fund managers skills | First, evaluate the past performance of the fund manager with their respective benchmarks and check if they have performed fairly. Next, having done with the evaluation of the fund manager, check what is the broader investment style of the scheme.

Axis Long-Term Equity Fund scheme was launched on December 29, 2009. The AUM of the scheme as on July 31, 2018 is Rs 18,262.47 crore which is highest among the peers in Equity Linked Savings Scheme (ELSS) category.

The 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

Jinesh Gopani heads equity desk at Axis Mutual Fund and has over 14 years of experience in financial markets. He manages funds such as Axis Long-Term Equity Fund, Axis Focused 25 Fund and Axis Emerging Opportunities Fund (Series 1). He has been managing Axis Long Term Equity fund from 1st April 2011, Axis Focused 25 Fund from 29th June, 2012 and Axis Emerging Opportunities Fund (Series 1) from 29th December, 2016.

Portfolio composition

Fund manager follows bottom-up approach to build a portfolio which aims to deliver steady and consistent returns for investors.

The fund is investing in stocks which are leaders in their sectors, solid growth story and flawless execution. The company should have strong financials, especially decent operating cash flows and less geared.

At present, the company avoids investing in PSUs, highly cyclical and highly regulated sector.

The outcome is compact portfolio reflecting high conviction, long holding periods and feature in consistently in top-3 list under ELSS category.

The fund is allocating 70.2% of the total corpus to large cap funds, 22.7% to mid-cap funds, 5.1% to small cap and 2% to cash as on July 31, 2018.

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Invest now through SIP route in this ELSS fund

There are two main advantages of regular investments in ELSS instead of one lump sum investment at the end of financial year.

Anil Rego, founder and CEO of Right Horizons said, “It is much easier to invest, Rs 5,000 per month over 12 months through SIP than invest Rs 60,000 in February or March. Since our incomes are monthly, expenses, too, are linked to this cycle. So, if you do not save and invest the required funds for tax-saving ELSS each month, there is a high chance that you may end up spending the amount. Once there is a shortfall, your entire tax-planning exercise may go for a toss and may result in lower tax savings and higher tax outgo.”

Also, an SIP route helps you take ELSS exposure across a longer period of time. This means you buy when markets are at highs and when markets are at not-so-highs. This allows you to have a lower investment cost than lump sum investment.

Rego added, “In most cases, the return from a SIP is better than lump sum. Let me illustrate, the 1-year SIP return from Axis Long Term Equity Fund is 23.55% versus lum psum investment route return of 22.90% as on Aug 29, 2018. By using the SIP route, you not only gain convenience but also more bang for the money.”

Expert Take

Rego said, “The fund consistently figures in the top-3 list from 1, 3 and 5 year SIP returns perspective. The fund's consistent performance has attracted investors and that is one of the reasons why this scheme is the biggest (in terms of assets) among 34 ELSS products despite being launched in 2009.”

He added, “The fund has a strict quality bias, which has been rewarded. We believe the fund has been able to maintain a good balance between large, mid and small-cap allocations within the portfolio. Its strategy of taking concentrated bets on high-conviction names (stocks) is also worthy of a mention. Still, the fund risk is low compared to many peers. Do remember the fund's current alpha is among the highest in the category, which means it will typically do quite well when markets perform.”

First Published on Sep 17, 2018 11:53 am
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