Mutual Funds

Axis Long Term Equity: Consistent top-tier performer

Vivek Ananth | Updated on May 24, 2020 Published on May 23, 2020

Mutual fund assets under management (AUM) were $55 trillion (64 per cent of global GDP) at end-2019   -  istock/relif

It is one of the top two funds in ELSS category over a long time horizon of five and 10 years

For investors who have opted to continue with the older income-tax regime, planning tax-saving investments has become paramount. One such investment option is equity-linked savings schemes (ELSS) of mutual funds.

Those looking to invest in ELSS should look at time-tested options. One such scheme is Axis Long Term Equity.

Steady performance

In the past year, the fund has outperformed its benchmark index (S&P BSE 200 TRI) by a wide margin. Axis Long Term Equity has also outperformed its category average during the past year.

It is among the top two funds in the ELSS category, in terms of returns, in three-, five-, seven- and 10-year time periods.

The fund manager maintains a relatively concentrated portfolio of 30-36 stocks, with an aim to probably focus on high-conviction ideas. Being a tax-saving scheme with a lock-in period could help the fund benefit from such stock picks.




Axis Long Term Equity has nearly two-thirds of its corpus deployed in its top 10 stock holdings, with 37 per cent of it in the top five stocks. The scheme has a bias towards the banking, financial services and insurance (BFSI) space. Although the fund manager invests in stocks across market capitalisations, the fund currently has a bias towards large-cap companies, with around 75 per cent of the corpus deployed in such stocks.

Out of the rest, 20 per cent is deployed in mid-cap stocks and 5 per cent in small-caps.

The fund has had 30-44 per cent of its corpus in the BFSI space over the past four years.

Till January 2020, the fund manager had deployed 40.8 per cent of the portfolio in stocks including Bajaj Finance, Bandhan Bank, HDFC Bank and Kotak Mahindra Bank.

This has, however, changed since February 2020, and the scheme has shed some of its bias towards BFSI.

The exposure to the space has come down by more than 7 percentage points in the past two months, and at the end of April rests at 33.6 per cent.

In the past few years, the fund manager has spread 9-10 per cent of the corpus in the technology services space, across top companies such as Tata Consultancy Services, Tech Mahindra, Wipro and Infosys.

However, from March onwards, the fund has invested only in sector leader TCS to the extent of 8 per cent.

The scheme had a little over 10 per cent of its corpus in the pharmaceuticals sector four years ago. But this steadily came down to 1.5 per cent in September 2019, and has hovered around 2 per cent since November 2019.

Now, after the Covid-19 outbreak, the fund has increased its exposure to the pharma sector by snapping up small stakes in Abbott India, Dr. Reddy’s Laboratories and Torrent Pharmaceuticals, and hiked its stake in Divi’s Laboratories.

Being a defensive play, the sector has weathered the market volatility reasonably well.

Till February 2019, the proportion of the fund’s corpus invested in the auto and auto ancillary space had stayed above 14 per cent. Then, as auto sales slowed, it started coming down, and has settled at around 9.2 per cent as of April 2020.

Published on May 23, 2020

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