The Axis long-term equity fund is one of the new ELSS funds started in 2009 and has catapulted itself to be the largest fund by a big margin. The fund belongs to Axis mutual fund house which is currently India’s 10th biggest fund house in terms of assets under management (AUM) out of more than 40 fund houses. In October of 2009, Axis mutual fund house came into existence. Within a short period of time, the fund house has achieved a very good growth rate and is now among India’s top 10 mutual fund houses.
Axis long-term equity fund is categorized as an ELSS (Equity Linked Saving Scheme) as it enables ection 80C tax deductions for investing and has a 3 year lock-in period. This fund has asset under management (AUM) of more than Rs.16,000 crore and is the biggest ELSS fund beating the 2nd biggest ELSS fund by more than Rs.6,000 crore. This fund is the flagship equity fund of Axis fund house and therefore has the maximum focus from the fund house.
Such high asset under management in such a short time shows investors trust in the fund, its performance, and stability. The fund has given very good trailing returns. It has consistently beaten its benchmark. In 7 year trailing returns, it is the best performing fund in the category, and in 5 years trailing return, it is in the top 3. For a new fund, this is a very good performance. These returns could be a factor for such a high asset under management (AUM) value.
Each category of mutual funds is allowed to charge a particular percent of its AUM as scheme expenses as per SEBI (Securities Exchange Board of India) regulations. This is known as the expense ratio. Equity funds generally have a higher expense ratio than debt funds. Expense ratio generally includes brokerage costs, fund manager’s fee, registrar fee, advertising expense, auditor and custodians share, etc. The expense ratio of this fund is 1.97% which is significantly lower than the average expense ratio of this category which is around 2.45%. So you directly save 0.5% here.
Axis long-term equity fund takes lesser risks and volatility is also minimal. The price-earnings ratio, also known as the P/E ratio of this fund is a bit higher. P/E ratio basically gives you the earning per share. It is calculated by dividing the price of the stock of a company by its earning on a single share. Higher P/E ratio basically indicates a lesser likelihood of returns. All in all, Axis long-term equity fund is a low-risk average return fund with high P/E. It is majorly a large-cap oriented fund with just above 67% allocation to it.
CONCLUSION
Axis long-term equity fund is a multi-cap fund in the ELSS category. This fund has outperformed its benchmark in the category in 6 out of 8 calendar years since launch. While selecting for stocks, this fund looks fit for superior and scalable businesses. It is large-cap oriented with about 65% – 70% allocation. Consistent performance has led to the fund seeing its asset size increase from mere Rs.4 crore at launch to over Rs.11,000 crore in 2017 and Rs.16,000 crore now. The fund, being a late entrant, hasn’t really been tested in the severe market meltdown of 2008 but its performance in 2011 showed that it is able to contain losses in a falling market. The fund manager of this fund is knowledgeable and has a high focus from the fund house due to its sheer size and level of assets under management.