Mutual Funds

Axis Equity Fund: Hold

Parvatha Vardhini C | Updated on October 27, 2012

IW28 spot 1 Axis Equity_col.eps

Axis Equity Fund has had a reasonably good performance since its inception in January 2010. Existing investors can continue to hold on to their units. Benchmarked to the S&P CNX Nifty index, the fund has a mandate to achieve long-term capital appreciation by investing in equity and equity-related instruments, including derivatives. It follows a blend of both value and growth styles of investing and takes exposures predominantly to large and mid-cap stocks.



Performance



With less than three years since its launch, the fund has only a limited track record. Nevertheless, it has put up a decent show, beating its benchmark and its category returns over one- and two-year timeframes.



In the last two years, the fund has delivered (-) 2.4 per cent, better than the Nifty’s (-) 3.3 per cent. Over the last one year, the fund has delivered returns of 13.6 per cent, beating its benchmark by about 4 percentage points. But this performance does not place the fund among the top performers in its category. Other established large- and mid-cap oriented funds such as Quantum Long-Term Equity, Canara Robeco Equity Diversified and Birla SunLife Frontline Equity, for example, sport higher returns in both timeframes.



However, the fund exhibited an ability to contain downside in the 2011 market fall. While the Nifty fell by about 24.6 per cent, the fund limited its losses to 22.5 per cent. Higher cash holdings during this period and increased exposures to defensives such as consumer non-durables perhaps helped cut down losses.



After deploying its cash in equities in the first half of the year, the fund went back to holding up to 19 per cent in cash during the second half of 2011. Consumer non-durable exposures too were stepped up to about 13 per cent in this period, from the 5-8 per cent levels seen in 2010. Besides, on a rolling return basis, the fund’s return has outdone its benchmark about 88 per cent of the time in the last two years.



The fund’s year to date returns stand at 25.2 per cent, again above both the benchmark and its category returns. Since commencement, it has achieved a compounded annual return of 5 per cent.



Portfolio



Banks and software have been the preferred sectors for the fund since inception. In its latest portfolio, the fund holds about 19.75 per cent in the banking sector and 12 per cent in software-related stocks. The holdings are biased towards large-caps, with 29 stocks of the basket of 35 having a market capitalisation of over Rs 7,500 crore. The top 5 stocks account for 33 per cent of the total holdings. About 14 per cent of its holdings are in derivatives, with index futures constituting 12 per cent.



Large-cap stocks such as HDFC, HDFC Bank, Infosys, L&T and Reliance Industries are some stocks the fund has held consistently. While recent additions are Bajaj Auto, Eicher Motors, Zee Entertainment,recent exits include Bata India, Dr Reddy’s Labs, Hindalco, HCL Tech, Lupin, GAIL and Jindal Steel and Power.



The NAV per unit of the growth option is Rs 11.48. Chandresh Nigam and Pankaj Murarka are the fund managers.

Published on October 27, 2012

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