Axis AMC has won three Fund House awards – Best Equity, Best Debt and Overall, in 2022. Chandresh Nigam, Managing Director & Chief Executive Officer, Axis AMC, takes us through what helped the fund house clock a stellar performance.
Please take us through the investment strategy and philosophy followed by Axis AMC.
Our investment approach is designed for us to find suitable investment opportunities in both equity and fixed income while adopting effective risk management strategies. We have adopted a comprehensive fund management approach through a clearly articulated investment strategy, stringent investment process, embedded risk management and an experienced investment team to execute this strategy.
We have a disciplined bottom-up stock picking approach which allows us to identify and invest into companies with sustainable businesses which have long-term growth potential. This in turn allows us to participate in the long-term growth cycle of companies without taking excessive risk. For our fixed income portfolios, we do extensive macroeconomic and company/credit research internally which helps us to get an overall view of the global and domestic economies and be correctly positioned.
Given the kind of volatility we are witnessing, how are you protecting drawdown in your funds?
Any risk management approach cannot be reactive to the market conditions but instead should be designed to remain relevant across cycles – which is what we believe we have been able to achieve, and which has really held us in good stead since our inception. Our approach has remained the same even in the current environment, which is to make sure that we talk to and understand what each of our investee companies are facing and to avoid taking any knee-jerk reactions linked to market movements or news flow.
Axis Bluechip Fund has become the largest fund in the actively managed Large Cap category. Can size impair the fund’s performance?
Size is an important element of any fund strategy and needs to be carefully understood and managed. At Axis, we have a robust process to look at appropriate capacity for each of our strategies and to make sure that we are aware of how much we can manage without affecting our style. Where we get close to capacity such as the Small Cap Fund, we have implemented restrictions on flows, but in the case of the Bluechip Fund given its liquid Large Cap portfolio, there is ample headroom in terms of capacity that exists. Of course, we keep reviewing the situation on an ongoing basis so will be okay to take action if this changes going forward.
Some of your equity funds like Axis Bluechip, Axis Midcap, Axis Long Term Equity and Axis Flexi Cap underperformed the category and benchmark in CY 2021 as value theme picked up. Do you envisage following a blend strategy or would stick to growth style in equity funds going ahead?
We believe that investment philosophy should be intrinsic to the funds that we are managing and cannot be changed based on different market environments – it will only cause confusion and make us miss out on the long-term trends. We believe that our approach has the best potential of capturing the long-term alpha from the Indian markets. That does not mean that it will not have years like 2021 when it can go out of favour. We remain committed to our long-term strategy.
Your fund house has done reasonably well on the debt side too. What has been your strategy on the debt side?
The core philosophy of high-quality portfolios backed by fundamental research and with strong entrenched risk management remains common to debt funds as well. We remain extremely prudent and conservative in taking on credit risk and in terms of ensuring that we have adequate risk management tools in place for our portfolios.
The industry is launching a series of passive equity funds. How are you seeing the appetite for passive equity funds from retail investors and High Net Worth Individuals (HNIs)?
Passive products are seeing a sharp jump in interest, and we believe it reflects on the growing maturity of the asset management industry in India. We believe that passive products will become an integral part of all long-term investor portfolios and we are working towards dramatically expanding our presence in this segment.
Winners of Morningstar Fund Awards 2022
