Axis Long Term Equity Fund - Rating & Review – Exit the Fund

Axis Long Term Equity Fund – Rating & Review – Exit the Fund

Roboadviso     Mutual Funds Rating     Posted On, Thu 20th October, 2016     2 comments
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  • Editor Rating
  • Rated 2 stars
  • 40%

  • Axis Long Term Equity Fund
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  • Last modified: July 21, 2017

Axis Long Term Equity Fund rating review

As an individual investor, you can invest up to Rs. 1.5 lakhs per year through the ELSS (Equity Linked Savings Scheme) route to reap tax saving benefits under Section 80C of the Income Tax. Bear in mind, that there is a lock-in period of 3 years for such funds.  ELSS funds, thus not only help you save on taxes, they also give superior returns on a long -term basis.

Axis Long Term Equity Fund is one of the best ELSS (Equity Linked Savings Scheme) funds for tax saving purposes with a proven record of flattering returns. Let us review the fund in greater detail to know if you should invest in it, hold on to it or switch to another tax saving fund.

Basic Information and Costs

Axis Long Term Equity Fund came into existence on December 29, 2009. It is benchmarked against S&P BSE 200.  The minimum investment needed is Rs. 500 both as lump sum and as well as SIP. The fund does not have an exit load, because the lock-in period is a minimum of 3 years.  The expense ratio is 1.98 percent and the AUM  (Assets Under Management) size is Rs. 10,465 crore.

Portfolio

The equity component in Axis Long Term Equity Fund is 98.46 percent with a debt portion of 2.16 percent. The top five sectors, the fund invests in are financial (35.43 percent), automobile (16.24 percent), healthcare (10.62 percent), chemicals (8.78 percent) and consumer durables (4.64 percent). The top holdings for Axis Long Term Equity Fund are HDFC Bank (8.43 percent), Kotak Mahindra Bank (8.43 percent), HDFC (6.58 percent), Maruti Suzuki India (5.88 percent), Sun Pharmaceuticals Industries (5.32 percent), Tata Consultancy Services  (4.48 percent), Pidlite Industries (4.39 percent), Motherson Sumi Systems (4.27 percent) Larsen & Turbo (3.87 percent) and Bajaj Finance (3.64 percent).

Performance

The fund has returned 7.63 percent, 28.62 percent and 21.98 percent per annum in a 1, 3 and 5-year period. In the past, Axis Long Term Equity Fund has been hailed as the number 1 fund in the ELSS category. Since its launch, the fund has delivered 19.33 percent returns per annum.

Axis Long Term Equity Fund has slipped in terms of performance in the past one year.  While the last 1-year return has been 7.63 percent, peers like DSP BlackRock Tax Saver Fund and ICICI Prudential Long Term Equity Fund have raced ahead with 21.76 percent and 13.26 percent.

Analysis

The fund manager Jinesh Gopani has played an instrumental role in the performance of Axis Long Equity Fund; he has been associated with the fund since 2011. Since its launch, the fund has been taking giant strides, outpacing its peers by generous margins. Axis Long Term Equity Fund is geared towards large caps with allocation increasing to 70 percent in the past couple of years. Mid-caps gets a 30 to 40 percent allocation while small cap participation in negligible.

The fund may not have been party to the 2008 bear market, but it did show that it can cushion loss quite well, in 2011. It has delivered exceptionally well in the bull markets of 2010, 2013 and 2014. However, one can see that the fund has slipped down the rank in the past one year.

Axis Long Term Equity Fund – Should I buy, sell or hold the fund?

At this point of time, we recommend holding the fund for a year and gauge its performance before deciding whether to buy or sell.

Pros

Good Fund Size
Low Expense Ratio

Cons

Performance in last 1 year has fallen
Good Consistency before 1 year but last 1 year has been bad
Fund Management Team is new and weak
Average Fund House

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    • The fund has been underperfoming lately and the fund management team is also not in place. They have seen churn in fund managemntn. Our recommendation is to exit if the investment has completed 3 years

       

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