Mutual Funds

Axis Small Cap Fund: Buy into small-cap correction

Yoganand D | Updated on September 08, 2019 Published on September 07, 2019

Over the past year, the fund gained 2.3% while the category tumbled 17%

Investors looking for opportunities in the small-cap segment can invest in Axis Small Cap. Launched as a close-ended fund in November 2013, it was converted into an open-ended scheme in November 2018. Investors are now allowed to invest in and redeem from the scheme on any business day.

The stocks in the small-cap spectrum have been in the doldrums over the past year. The S&P BSE SmallCap TRI has tumbled 25.5 per cent during the period. This steep correction provides an opportunity for investors with an appetite for high risk to allocate a certain portion in the small-cap space. Considering the volatile nature of the fund, one can invest in it through the SIP mode.

Performance

Axis Small Cap has delivered a compounded annualised growth rate (CAGR) of 20 per cent since its launch. Over the past five years, it has given a 11.7 per cent CAGR return and has outperformed its benchmark, the Nifty Smallcap 100 TRI, by a wide margin of 9.6 percentage points. The scheme’s performance over the past one year has been commendable as it gained 2.3 per cent while small-cap indices plummeted over 25 per cent. The small-cap fund category tumbled 17 per cent during the period. The fund has thus been able to contain the downside well, lending comfort. It is the table topper in the last one-year period, beating veterans such as HDFC Small Cap and SBI Small Cap.

 

 

 

Axis Small Cap predominately invests in small-cap stocks that have growth potential. It holds about 67 per cent of its portfolio in the small-cap segment and 32 per cent in mid-caps.

The scheme appears to have anticipated the correction in early 2018 and had begun to reduce its equity exposure gradually while increasing the debt portion. Within debt, it started to invest in repo instruments in February, and currently holds over 14 per cent of its portfolio in this asset class.

After underperforming in 2017, the fund managed to cap the downside well in 2018. It has about 32 stocks in its basket. Chemicals is the top sector holding, followed by finance, in which it recently increased allocations. Also, it added retailing and pharma stocks to the portfolio.

It is underweight on services, automobile, engineering and healthcare, while overweight on financial, construction and IT sectors. Some of the top holding stocks are Galaxy Surfactants, MAS Financial Services, City Union Bank, Gulf Oil Lubricants India and NIIT Technologies.

(Axis Small Cap Fund has not been rated by BusinessLine Portfolio Star Track Mutual Fund Rating due to its short NAV history of less than seven years.)

Published on September 07, 2019
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