BOI AXA Treasury Advantage Fund - Rating & Review

BOI AXA Treasury Advantage Fund – Rating & Review – Exit the fund

Roboadviso     Mutual Funds Rating,Uncategorized     Posted On, Sat 15th April, 2017     No comments
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  • BOI AXA Treasury Advantage Fund
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BOI AXA Treasury Advantage mutual fund rating review

BOI AXA Treasury Advantage Fund is an Ultra Short Bond Fund from BOI AXA AMC.  Let us find out more about the fund and check if it is feasible to invest or we should sell it off.

Basic Information and Costs

It has been in existence almost since the last nine years, founded on July 16, 2008.  It is benchmarked against Crisil Liquid Fund. The fund has been perceived as ‘moderately low’’ from the risk point of view.  Its an open ended fund.  The minimum investment required for the fund is Rs. 5000 . The minimum withdrawal is Rs. 1000. There is no exit load on redeeming the fund.

The AUM (Assets Under Management) of the fund is Rs. 367 crores.  The expense ratio is 0.55%, as on April, 2017. The expense ratio is on the higher side when compared to peers in this category.

Portfolio

The Fund has invested in 21 securities which is far below the industry standard. The YTM (Yield pre expense) of the fund is 8.12% and average maturity of papers is 0.64 Years.

The fund has invested 25% in AAA papers, 42.65% in A+ papers, 10.82% in AA papers  and 21.53% in A and below papers. The exposure in A  and below papers is higher than the peer average which leads to high credit (Default) risk in fund. 

Performance

The Fund has annually returned 9.04 percent in 1 year, 9 percent in 3 years and 9.03 percent in 5 years. It has performed admirably well, as compared to its peers.  Since inception, it has given 7.98% percent returns per annum.

Analysis

Performance comparision of BOI AXA Treasury Advantage fund with some of the recommended peers is as under:

BOI AXA Treasury Advantage Mutual Fund

BOI AXA – Treasury Adv Reg (G) is not a recommended fund because of following reasons:

  • BOI AXA is a very small AMC with total AUM of approx. Rs. 3,000 Cr. It is always recommended to invest with large AMC
  • BOI AXA – Treasury Adv Reg (G) has a very small AUM (Rs.367 Cr) fund which can lead to higher default risk and poor quality fund manager.
  • Fund is expensive with Expense Ratio of 0.55% compared to peers of 0.27%
  • The performance of fund has been good. This is because fund has been taking higher credit risk. The fund has 24.9% in AAA (High Quality) and 21.53% in A & Below (Low quality). This is in contrast to high quality of peer funds. This increases significant default risk.
  • The fund is not adequately diversified. This has only 21 securities with single largest exposure of 12.09%, which is not recommended. Increases default risk.

Should I invest, sell or hold Quantum Long Term Equity Fund?

This fund is not ideal for investment. Fresh investment should not be made. If you already have exposure in this fund then you should immediately exit the fund if tax implication is minimal.

Pros

Good Performance

Cons

High Expense Ratio
Average Fund Manager
Average Fund house
Small Fund size
High Credit Risk

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