Axis Mutual Fund has some good equity offerings

By Kavitha Krishnan |  24-01-20 | 
 
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About the Author
Kavitha Krishnan is a Senior Research Analyst on Morningstar's Fund Research team. She has over 9 years of experience in the Financial Sector. She would like to hear from you, but cannot give financial advice.

Axis Mutual Fund is amongst the few AMCs that stands out in terms of its well-defined and differentiated product offerings.

A few years ago, the AMC lost two of its founding members from the investment team - Pankaj Murarka and Sudhansu Asthma. Post that, portfolio manager Jinesh Gopani’s was elevated to head of equity. The AMC was also quick to hire two new managers into the team. Though the AMC went through a transition phase, the team has remained stable since then. The current team seems well-placed and the three fund managers seem to work well together, making extremely valuable contributions in formulating the house views.

On an overall basis, we think that the fund house has a very disciplined approach towards selecting stocks. Their focus on selecting companies with strong corporate governance practices and their long term buy and hold approach had paid off over the long term. Their ability to stick to the investment strategy even during testing times have helped them tide through market downturns effectively.

Jinesh Gopani looks for companies that have the capability to grow over a three- to five-year period and places a lot of emphasis on finding quality names at reasonable valuations.

From a valuation perspective, he can tend to invest in stocks that are slightly expensive in relative terms if they meet his internal quality and growth criteria.

On an overall basis, our conviction on Gopani, his consistent and efficient execution of the fund’s relevant strategy, and the long-term performance remain positives. The keyperson risk is a factor that needs to be looked at though, as well as the magnitude of growth in the fund’s asset size. Also, Gopani has a relatively short tenure at the helm of Focused 25.

  • Fund: Axis Focused 25
  • Rating: Bronze

This fund has been in existence since June 2012 and has been managed by Jinesh Gopani since June 2016.

The fund shares a fair bit of overlap with Axis Long Term Equity and remains a top-heavy high-conviction strategy.

The manger’s bottom-up approach to investing leads to a portfolio that is currently devoid of stocks within the utilities and energy sectors. The portfolio is markedly benchmark-agnostic and typically shares a very low overlap of around 30% with the IISL Nifty 50 Index.

The fund’s long-term performance has remained positive, with both the regular and direct plans of the fund meting out top-quartile performance on a cumulative basis across one-, three-, and five-year periods as of November 2019. The significant growth in assets the fund has witnessed over the past year has not diluted the portfolio or the execution of the strategy. The AMC has internal limits in terms of capacity, and we think that this is a positive. Overall, we think the fund has remained true to its mandate and will continue to be managed in the same manner going forward. Having said that, Gopani’s relatively short tenure at the helm and the key-person risk associated with him remain key watchpoints.

We think the fund is well placed to deliver on a consistent basis.

  • Fund: Axis Long Term Equity
  • Rating: Bronze (Regular) and Silver (Direct)

Jinesh Gopani has been managing since April 2011 and has been able to execute the strategy with consistency so far. We think he stands out as an efficient stock-picker who invests based on his high-conviction ideas.

The manager typically invests about 50%-70% of the portfolio in large-cap stocks. The team follows an in-depth process that aims to identify under-researched ideas. The research process and the manager’s style of investing gives the portfolio a distinct character that reflects Gopani’s high-conviction ideas. The portfolio is markedly benchmark-agnostic and typically shares a very low overlap of about 25%-30% with the S&P BSE 200 Index.

Despite being the largest fund in the category, the fund’s long-term performance has remained positive. The AMC has internal limits in terms of capacity, and we think this is a positive.

Overall, we think the fund has remained true to its mandate and will continue to be managed in the same manner going forward.

Despite the underperformance in 2016 and 2017, the manager continued to remain focused towards investing in high quality stocks and this has paid off in the recent times.

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Mukund Pawar
Jan 28 2020 12:28 AM
 Great Analysis !
Axis Long Term Equity Fund has performed exceptionally well in the entire ELSS category.
Prakash Sharma
Jan 26 2020 04:34 PM
 Very Good analysis. However Funds deserve Better Ratings.
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