Mutual Funds

Steady if not spectacular

K Venkatasubramanian | Updated on January 24, 2018


The fund maintains a fairly stable portfolio and sticks to relatively safe stock bets

Investors looking for stable large-cap funds that generate above-average returns over the long term could consider buying units of Axis Equity.

Over one, three and five-year timeframes, the fund has outperformed its benchmark, the Nifty, by 3-5 percentage points. It has also done reasonably better than its category over three and five-year periods.

The scheme’s annual return of 13.9 per cent over the last five years places it in the top quartile of funds in its category.

Axis Equity, which completed five years recently, manages to contain downsides very effectively, while ensuring adequate participation during market rallies.

It maintains a fairly stable portfolio, without heavy churning, and sticks to relatively safe stock bets.

The scheme is suitable for investors with a moderate risk appetite looking to build a long-term corpus, for which the fund could be a key part of their portfolio.

Investments can also be considered through the systematic investment plan (SIP) route, with a horizon of at least five years.

Portfolio and strategy

Axis Equity invests predominantly in large-cap stocks. Most of its picks are from the Nifty basket.

It does take exposure to mid-caps (companies with market capitalisation of less than ₹10,000 crore), but it is restricted to around 15 per cent of the portfolio on an average.

The fund reduces risks by taking cash and debt calls to the tune of even over 10 per cent when the markets turn volatile. In the last one year, though, the exposure to cash and debt has generally remained at less than 5 per cent levels.

Banks and software have remained the top sectors on which the fund has bet across market cycles.

The scheme takes more than 20 per cent exposure to banks, largely from the private sector space. It has mildly trimmed exposure to the software segment, though, given the growth concerns surrounding the sector.

In recent months it has increased exposure to automobiles and pharma, two segments which have a fair degree of earnings visibility as well as growth potential.

On the whole, Axis Equity’s portfolio does have a defensive tilt, with selective bets on cyclicals as well.

Some of the top holdings of the fund include HDFC Bank, L&T, Sun Pharmaceuticals, TCS, HDFC, Maruti Suzuki and Bharti Airtel. Some quality picks from the mid-cap space include DCB Bank, Voltas, GSPL and Federal Bank.

Invest in it for the long term.

Published on May 31, 2015

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