Monday, 6 April 2020

What are the benefits of investing in an Axis small-cap fund

The advantage of investing in Axis small-cap fund direct growth

  • A bottom-up approach to investing in a small-cap designed to identify long-term companies.
  • It is aimed at generating alpha with a diversified stock portfolio.
  • Build a portfolio with risk and reward, keeping risk in mind and navigating the volatile movements of the stock.
  • Small-cap is ideal for investors who can invest patiently and who are ready to absorb the short-term volatility investment horizon of 5 years or more.

What is the product label of Axis Small-Cap Fund Direct-Growth?

It is an open-ended equity scheme that primarily invests in small-cap stocks.

  • This product is suitable for investors seeking long-term capital gains.
  • You are investing in a diversified portfolio consisting mainly of equity and equity instruments of small-cap companies.

Axis small-cap fund direct growth performance

There may or may not be continuity in future past returns. The composition of expenses is different in different schemes. Anupam Tiwari has managed the scheme since 06 October 2016, and they manage seven Axis Mutual Fund schemes. The fund manager oversees all schemes. Annual compounding over one year (CAGR). Face Value: Rs. 10 per unit.

Axis Small Cap Fund has outperformed in the last one year

Most small-cap category funds have been in negative territory over this period.

With the fund’s outperformance looking impressive, passing a one-year track record, but investors should not pay attention to the fact that equity is a long-term investment vehicle.

In a market where small-cap stocks have shaken badly (S&P BSE Smallcap is below 9%), Axis Small Cap Fund has given a return of around 22% over the previous year ended on 13 November 2019.

During this time, most of the funds of the small-cap category are in negative territory. The average return of funds in this category has been minus 2 percent in the last year.

Axis small cap fund direct growth Fund Manager Anupam Tiwari, who has managed the fund since October 2016, says the fund’s outperformance can be attributed to the stock selection strategy. According to Mr. Tiwari, our allocation in sectors such as IT, chemicals, and financials have worked well for the fund.

Stock selection strategy

  • Good corporate governance
  • Quality of business
  • Business cycle (favorable business cycle) and valuation

According to the fund manager, we avoid businesses entirely with poor corporate governance and do not demonstrate the desire or intention to grow the business.

It is important for investors not to choose their equity fund based on only one year’s success. If you have been investing for many years in the future, it is also essential to look at long-term returns in the past. Look at historical returns, and evaluate the fund’s returns over at least five years to see the fund’s success through the market cycle. Furthermore, returns should not be considered when selecting funds for investment. Portfolio characteristics such as concentration probability, as well as evaluation, experts should also be examined.

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