Mutual Funds

A savvy tax-saver: Axis Long Term Equity - Buy

Bhavana Acharya | Updated on: Oct 18, 2014
PO20_spot1_Axis_NET.jpg

PO20_spot1_Axis_NET.jpg

BUY_new

BUY_new

The fund has been a consistent top-quartile performer, delivering 62% in the past year

Tax planning on your mind? Equity-linked savings scheme (ELSS) plans, which are covered under Section 80C’s large umbrella, are a good option. Of the several ELSS funds in the market, Axis Long Term Equity, floated in December 2009, has consistently been a top-quartile fund.

Benchmarked against the BSE 200, the fund has beaten the index more than 95 per cent of the time on an annual rolling return basis since inception. That points to a strong record of steady and good performance. Axis Long Term’s returns over one- and three-year periods are better than peers, such as Franklin India Taxshield and ICICI Pru Tax Saver. Around 70 per cent of the portfolio is usually parked in large-caps, reducing the overall risk.

Investors can buy units in this fund in phases to counter the risks involved in lump-sum investments. While ELSS funds may be bought through systematic investment plans, each monthly investment will be locked in for three years. Managing this may become cumbersome if the SIP is run for several years.

Picking up winners

Axis Long Term Equity has delivered a thumping 62 per cent return in the last one year, walloping the BSE 200’s 33 per cent return. Over a longer three-year period too, the fund’s returns are 12 percentage points above the benchmark. The scheme stays invested in equities at over 90 per cent of the portfolio, which helps it make the most of a market rally.

Gems, such as Maruti Suzuki, Bata India, TTK Prestige, Page Industries, HDFC Bank, TCS, Larsen & Toubro, Kotak Mahindra Bank and Motherson Sumi Systems, were picked up three to four years ago, buoying returns.

Deft sector moves

Besides snatching up stock winners, Axis Long Term got its sector calls right as well. For instance, it piled up on software stocks in early 2013, building them up over the year before trimming exposure from May this year as other sectors bounded forward. It picked up the out-performing logistics sector, for example, as well as auto ancillaries. Its holdings in consumer durables stocks were slowly built up from late 2011, which paid off when these stocks bounced back in a big way, especially in the recent rally.

The fund exited refineries — mostly through Reliance Industries — early on in 2012. Similarly, the struggling steel sector was offloaded through 2012. Tobacco major ITC was gradually removed by mid-2014 after its phenomenal run, while the paints sector was exited by March.

Axis Long Term’s latest portfolio consists of a good proportion of private sector banks, which are far better placed to ride a recovery than their public sector counterparts.

Published on November 20, 2014

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