Our analysts initiated coverage on Axis Long Term Equity fund and assigned it a silver rating for the fund’s proven track record.
Jinesh Gopani has been managing Axis Long Term Equity Growth since April 2011 and has been able to execute the strategy with consistency so far. We think that he stands out as an efficient stock-picker. This is the largest fund in the Tax Savings (ELSS) Morningstar Category, with the second-largest fund being half its size.
Although the growth in fund size is consistently monitored by the fund house, we are wary of the pressure that it puts on existing resources.
Gopani looks for companies that have the capability to grow over a three- to five-year time period and places a lot of emphasis on finding quality names at reasonable valuations. The portfolio typically invests about 50% to 70% in largecap names with the remaining portion of the portfolio invested in small- and mid-cap stocks. The team follows a detailed research process that aims to identify under-researched ideas. The portfolio is made up of Gopani's high-conviction ideas and has a distinct character. The portfolio is markedly benchmark-agnostic and typically shares a very low overlap of about 25% to 30% with the S&P BSE 200 Index. From a valuation perspective, the team tends to invest in stocks that are slightly expensive in relative terms as long as they meet its internal quality and growth criterion.
Overall, we think that the fund has remained true to its mandate. Despite its recent short-term underperformance and the changes in the investment team, we think that Gopani is capable of turning things around. Our conviction in Gopani, his consistent and efficient execution of the strategy, and the positive long-term performance lead us to assign the fund a Morningstar Analyst Rating of Silver.
To obtain a more detailed understanding about the fund, in terms of the type of stocks the fund manager invests in and the investment process he follows, download the detailed report: Axis Long Term Equity Fund
What the ratings indicate
The Morningstar Analyst Rating for Funds is a forward-looking analysis of a fund. The analyst looks at 5 key areas crucial to predicting the future success of a fund: People, Parent, Process, Performance, and Price.
Gold / Silver / Bronze: These are the top three ratings and are all positive. While all indicate that our analysts think highly of a fund, the difference between them corresponds to differences in the level of analyst conviction in a fund’s ability to outperform its benchmark and peers through time, within the context of the level of risk taken over the long term*.
Neutral: These are funds in which our analysts don’t have a strong positive or negative conviction over the long term*.
Negative: These funds possess at least one flaw that our analysts believe is likely to significantly hamper future performance over the long term*.
* Long term is defined as a full market cycle or at least 5 years.
