Axis long term equity fund is undisputed best equity linked saving scheme (ELSS). This mutual fund scheme has given outstanding returns with the benefit of tax savings. Since its inception in 2009, the Axis long term equity fund has outperformed the benchmark index S&P BSE 200 and ELSS category. During the 5 year and 3 year period the axis long term Equity fund is the top performing ELSS. Here are the top 10 reasons of its splendid performance. Read this positive review before buying the Axis long term Equity fund online.
- 1 1. Dynamic Portfolio
- 2 2. Solid Base of Blue chip Shares
- 3 3. Quality Mid Cap Picks
- 4 4. Share For Long Term
- 5 5. Small Portfolio
- 6 6. Little Churning
- 7 7. Stay Away From the Companies Which Look At Government Policies
- 8 8. Safe Distance From PSU Stocks
- 9 9. Avoid The Shares Which Has Regulatory and Corporate Governance Issues
- 10 10. Consistent Fund Manager
1. Dynamic Portfolio
Axis long term equity fund swam with the market’s current. Since the inception, it has been always on the right side. In 2010, the fund avoided the energy sector and lapped the financial stocks. It was a master stroke. The energy stocks were worst performer and financial stocks were the best performer in 2010. In 2011, the Axis long term equity fund increased its focus on FMCG and pharma. These were the best sector in 2011. Again, the fund avoided power and oil & gas sector. It helped the Axis Long Term Equity Fund to remain among the top performing ELSS. In the next 3 year, the fund tilted towards the private banks, auto ancillary and FMCG. These were the darling stocks of the last few years. The fund also decreased its holding of consumer non-durable. Again, It proved a good judgment. Consumer non-durables performed badly in 2014. This dynamic management of Axis long term equity fund has helped it to remain on the top.
The Axis long term equity fund never took excess risk. While the benchmark of this fund is S&P BSE 200, the fund favored the blue chips. In the fund objective, it has stated to keep the large cap stocks minimum of 50%, but in practice it has always allocated two third of its fund of the blue chip stocks. Year on year, the ratio of blue chip never went below the 66%. Because of the blue chip focus, it never felt heavy shock. The L&T, TCS, HDFC bank, HDFC, Sun Pharma, Maruti and Kotak Mahindra Bank are selected large cap stocks.
3. Quality Mid Cap Picks
Despite the emphasis on blue chip stocks, the Axis Long Term Equity Fund lapped every opportunity among mid caps. It selectively picked the sound mid cap companies. TTK prestige, Pidilite, PI industries, Cummins, Bajaj Finance, Bata are some of its quality mid-cap picks. These mid-cap companies are known for the sound management and long term growth prospects. However, this ELSS never took an excess risk by investing heavily on mid cap and small cap companies.
The Axis Long Term Equity Fund never chose a stock for the short term profit. It selected a stock to keep for long. A stock which can give good returns in the long term, what if it remains idle for few months. The L&T, Sun Pharma, TCS and Pidilite are the share for the long term. These may not give good returns instantly, But these are the market leaders and has proven track record.
5. Small Portfolio
Axis Long Term Equity Fund never bought shares without giving a thought. This resulted in a small portfolio of stocks. Since the inception, Axis long term equity fund had average 40 stocks in its portfolio. However, the ELSS category average is 50 shares. The less number of shares means greater research on the shares. For a fund manager also managing few shares is easier. Axis has tried hard to stay away from the risky companies.
6. Little Churning
The investment philosophy of the Axis long term equity fund is to choose the good company and hold for the long term. The fund believes in holding the stocks till it has value. Therefore, the fund does not churn the stocks frequently. The average holding period of the share in Axis long term equity fund is about one year. Indeed, 2/3 of shares are more than one-year-old in the portfolio.
7. Stay Away From the Companies Which Look At Government Policies
The Axis long term equity fund has set rules for choosing the company. The fund avoids those companies which are anyway dependent on government policies. It has deliberately avoided the companies from energy sector because the performance of these companies is linked to the government policies. This filtering has given more stability to the portfolio. The companies in the portfolio of the fund can under perform only because of the economic condition, not because of the sudden change in the rules. The Axis Long Term Equity Fund faces less surprise due to this criteria.
8. Safe Distance From PSU Stocks
The government indirectly regulates the public sector companies. The decisions of government stocks are not always because of business consideration. This makes these companies unpredictable. A loan waiver, subsidy or social obligation can jeopardize the profitability of the company, Hence, Axis long term equity fund avoids the government companies. Even it does not invest in public sector banks.
Axis Long Term Equity Fund has steered away from the shares which have any type of regulatory problems or corporate governance issue. The fund did not invest in the real estate companies. The real estate companies are not well regulated and face many allegations. The corporate governance of these companies is also questionable. The fund did not touch the Ambani companies because of the corporate governance concern. Even, it has not ventured into the Mallya companies. After this minute filtering, the Axis long term equity fund was left with the most reliable shares. Among them, it has picked the market leader who has the pricing power.
Must Read: Best ELSS to Invest in 2016
10. Consistent Fund Manager
The fund manager gives direction to a mutual fund. The frequent change of fund manager leaves the mutual fund in disarray. Fortunately, Axis Long Term Equity Fund has the consistent fund manager since last 4 years. Except initial one year Jinesh Gopani is managing the Axis long term equity fund. Gopani has worked extensively on the objective of the fund. He has made it a low risk, high growth ELSS. Gopani Gives extra importance to the corporate governance. You can’t find a rotten egg in his portfolio.
Do you find some more good qualities of Axis Long Term Equity Fund? Please share in the comments section.
Yo should also read how Axis Long Term Equity Fund fared against its peers.