Axis Long Term Equity Fund Review

Axis long term equity fund is a gem among all equity linked saving scheme (ELSS) equity diversified mutual funds of India. That means this is a tax saving mutual fund. This mutual fund scheme gives you twin benefits of excellent returns as well as the tax benefit.

See: –Why ELSS is Best Tax Saving Option than PPF, NSC & Bank Fixed Deposit

This Product is suitable for Investors who are seeking

  • Capital appreciation over the long term.
  • Investment in a diversified portfolio predominantly consisting of equity and equity related instruments.

Key Features of Axis Long Term Equity Fund

  • Open-ended equity linked savings scheme with a 3-year lock-in
  • One of the lowest lock-in periods (3 years lock-in) amongst other tax saving instruments.
  • Provides tax benefits of up to Rs. 46,350* under section 80C of the Income Tax Act, 1961.
  • Suitable for an investment horizon of at least 3-5 years or more

Objective of Axis long Term Equity Fund

Axis long term equity fund is a diversified equity mutual fund. An equity mutual fund should give a high return in the long term. Here is the scheme say about its objective.

The investment objective of the Scheme is to generate income and long-term capital appreciation from a diversified portfolio of predominantly equity and equity-related Securities.

Strategy of Axis Long Term Equity Fund

To achieve its objective of long-term profit, the Axis long-term equity mutual fund is working on the following strategies.

  • They invest ~50-100% in large caps & Max. 50% in quality Mid-caps.
  • Fund never focus on any particular sector; rather they pick shares from any good performing sector.
  • Fund works on long-term growth strategy by investing for a long term; they do not take into consideration short-term profit.
  • It will invest primarily in large-cap stocks/blue chips. At least 50% of the portfolio will be of large-cap shares. This percentage has always gone to 62% to 70% that is why the fund is less risky. The top 100 companies in India are considered as the large caps. The investment in large cap shares can go up to 100%.
  • The investment in midcap companies can go up to 50% of the portfolio. Midcap companies are those companies which are from rank 101 to rank 400. CNX 500 is considered for this ranking.
  • The Fund invests in quality businesses. The business which can sustain for decades.
  • Give enough weight to dividend paying company shares for regular income.
  • The fund invests through bottom-up stock picking. It means the fund picks individual shares irrespective of their sectors.
  • Picking Quality Mid Caps – Despite the emphasis on blue chip stocks, the Axis Long Term Equity Fund lapped every opportunity among mid caps. It selectively chose 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 in mid cap and small cap companies.

4 Stock Picking Strategies of Axis Long Term Equity Fund

  • Sound management pedigree with a track record to manage business in all economic cycles
  • High sustainable growth &superior return metrics
  • Superior and scalable business model
  • Avoid highly cyclical and highly regulated sectors

Focus on bottom-up stock picking of stocks which has sound business models, pricing power, quality management and have consistently created long-term wealth for its shareholders.

Portfolio of Axis Long Term Equity Fund

The portfolio of Axis long term equity fund primarily consists the Banking/Finance (31.4%), Automotive (16.4%) and Consumer (16.1%) sectors. Banking and Automotive sector grow with the economy.  Hence, you can expect better performance if the economy grows.

Axis mutual fund Long Term Equity Fund ELSS

Portfolio of Axis Long Term Equity Fund ELSS (Source-Axis MF)

HDFC Bank (8.3%), Kotak Mahindra (7.6%) & HDFC (6.1%) are the 3 of the biggest holdings in its portfolio. This fund has also invested in Sun Pharma which is giving better returns these days. It also has very good Midcap companies like Pidilite and TTK prestige.

To know more about the latest detailed portfolio of Axis Long Term Equity Fund, you can visit theAxis MF website.

Performance of Axis Long Term Equity Fund Growth

This fund has performed extraordinarily well. It has been way ahead of the benchmark index S&P BSE 200.  Since inception, it has given CAGR of 19.28% return (as on 30th June 2016). This return is very good, considering the CNX Nifty and BSE 200 has given only 7.46% & 7.66% returns respectively.

Axis mutual fund ELSS NAV Movement

NAV Movement – Axis Long Term Equity Fund (Source – Axis MF)

As you can see from above image that if you have invested Rs.10,000 on the inception of this scheme, then would have got almost triple the amount i.e. Rs.31,490.

Axis mutual fund

Performance of Axis Long Term Equity Fund (Source – Moneycontrol.com)

As shown in above image, fund has beaten benchmarks in 2, 3 & 5 years period. By far this is best ELSS mutual fund.

Peer Comparison of Axis Long Term Equity Fund Growth

As you have seen above, the ‘Axis long term Equity Fund Growth’ has been a consistent outperformer. It has always beaten the category average.

Axis Long term equity fund

Top 5 Best ELSS Mutual Funds for 2016

You can see Axis long term equity fund is far ahead with its nearest competitor in 3 years and 5 years period. However, during last one year, DSP Blackrock & Birla Sun Life Tax Relief 96 has a slightly done better than Axis long term equity fund.

See: –Top 5 Best ELSS Mutual Funds

Risk

The measurement of risk of a mutual fund is a somewhat technical. A fund is riskier if it swings more than the benchmark index. If Nifty falls 5% and the fund falls 10%, the fund is riskier.

The swing of a fund in comparison to market is measured in terms of standard deviation and Beta. Greater standard deviation means riskier fund.  If beta of less than 1 means the fund has less risk compared to Benchmark index. If benchmark index grows by 100%, then the fund will grow 83%, and same applies for fall.

Notwithstanding high performance, the Axis long term equity fund is less risky. The standard deviation of Axis Long Term Equity Fund is less than its benchmark index. Beta was also less than 1 during last 3 years.

Standard Deviation 14.1%
Standard Deviation of benchmark 15.7%
Beta 0.83

Among the top 5 ELSS, the Axis Long Term Equity Fund is least risky.  Though it is less risky, it has given by far the best returns than any other mutual fund.

Management

Axis Long Term Equity Fund is managed by Jinesh Gopani. Jinesh Gopani is an old hand of the Axis mutual fund. Jinesh is managing the Axis Long Term Equity Fund since April 2011.

Jinesh has nurtured this fund. Within just two years of his management, the Axis long term equity fund started to glaze. Under Jinesh’s management, the year 2013 and 2014 were quite good for the Fund. See below the performance of the two schemes of ELSS in last 3 years.

Expenses of Axis Long Term Equity Fund

As you know, that Expense ratio factor is imperative, as it drastically changes your returns over the period. Lower the Expense ratio, better the returns.  This ELSS does not charge any entry/exit load.

The Axis Long Term Equity Fund takes 1.98% for Regular Plan & 1.28% (as on 31st July 2016) for Direct Plan of the asset under management every year as fund expense /management fees.

Now all the funds have launched Direct plans, which is very good news for all. Always choose the Direct plan as they give you more returns than Regular Plans.

Terms of investment in the Axis Long Term Equity Fund

  • The minimum investment should be of Rs 500.
  • The money lock-in period is 3 years.
  • Every consecutive SIP installment is locked for 3 years individually.

Variation of Axis Long Term Equity Fund

There are four separate plans.

  1. Regular Growth
  2. Regular Dividend
  3. Direct Growth
  4. Direct Dividend

Growth plans re-invests your money in your fund, while Dividend funds give some benefits in the form of the dividend. NAV of these funds is less than Direct plans. For wealth creation, you are advised to invest in Direct Plan with Growth Option.

How Much Tax You Can Save With This ELSS

Well, it depends on which tax bracket you fall under. Assume that your Taxable Income is Rs 5,00,000 and you invest Rs 1,50,000 in Axis Long Term Equity mutual fund. So now your taxable Income becomes Rs 3,50,000. So you can save tax of Rs 10,000 in the first year and Rs 30,000 in 3 years.

How to invest in the fund?

One can do so either from aggregators, distributors, i.e., Regular channel or through Direct Channel option.

We suggest you use the Direct Plan & Growth Option where there will be no commissions, and you’ll have better returns. You can do so by purchasing directly from Axis Website.

You need to make sure that you are KYC compliant. If not, you can send your filled up KYC form along with Application Form for axis Long-term Equity. You will need to send filled up the application form, cheque/DD, and PAN card details. The Folio number will be opened in your name.

After that, you can make regular investments through ECS or standing instructions from the bank account. If you do need guidance on how to invest in mutual funds, do let me know in comments below.

See – 6 Different Ways on How to Invest in Mutual Funds

Conclusion

Axis Long Term Equity Fund is by far the best Equity Linked Saving Scheme (ELSS). It has beaten the benchmark & all other category mutual funds since its inception. If you want to save tax as well as gain excellent returns, this is the best mutual fund.

14 Replies

Trackback  •  Comments RSS

  1. Niteish says:

    This fund looks to be very prominent..will definitely invest in this..thanks for all the details…

  2. Sushant Kulkarni says:

    The lock in period for ELSS is 3 years and we cannot withdraw before that. In that context what do 1,3,6,12 months returns indicate? aren’t returns available only after lock in period?

    • Ashu says:

      Hi Sushant, You are right that no can redeem funds before 3 years in ELSS funds. The returns are shown for certain period to show how the fund has performed is last few days/months/quarters/years. That doesn’t show lock-in period.
      The returns changes everyday as NAV changes. Hope this Helps.

  3. Urvashi Sharma says:

    One of the best axis long term equity fund review i have seen. After looking all details I have decided to invest in this fund only for my tax saving needs.

    Thanks for the detailed review.

  4. Karthik says:

    Excellent write up on the fund.

    Can I start SIP and simultaneously invest some amount in lumpsum.

    • Ashu says:

      Yes. You can definitely have both simultaneously.

      • Deepak chaudhari says:

        ELSS is very good investment plan. But axis long term equity fund not performing well since last 1 year. even this fund was not beat his index return. Pear return is also negative. So before investing in this fund think twice. Or select another scheme.

        • Ashu says:

          Hello Deepak, If you see all the funds in this category did not perform well in last 1 year, as our index was low. This does not mean that the fund is not performing well. Do not compare funds on the performance in short term. I still believe that this is best ELSS due to excellent investment strategy of the fund. Obviously there are few other funds like DSP Blackrock and Franklin which are also performing well.

          • vinod says:

            Axis LT Equity Fund – Gr fund has been struggling to perform as compared to its benchmark. I expect it to give better results in future but wondering what went wrong in the last 1 year period.

            Please suggest. Should I wait and hold it for few months?

          • Ashu says:

            Hi Vinod,
            I would suggest evaluating the performance in 3+ years in the case of ELSS mutual funds. Having said that one drawback of Axis Long Term Equity fund is that Asset size has blown up 10K Cr+ so it will become more difficult for funds to generate returns.

            Also, if you see the portfolio of this fund, you can see there are a number of large caps whereas other similar category funds have a number of mid-cap & small cap stocks. Since mid cap & small cap stocks are performing better than large caps, the funds having small & mid cap stocks in their portfolio giving better returns.

            But still, I would advise you to hold this fund for some time. You may take call in next 6 months. Also, make sure to have another ELSS in your portfolio like DSP Blackrock or Reliance.

            Hope this helps.

  5. Yash says:

    Should I exit axis long term equity fund as this fund is not giving good returns?.

    • Ashu says:

      Hi Yash,

      Many investors are asking this question these days. As I have said in my answer above, we must give sometime to fund manager to have a re-look at current positions. Generally when fund size becomes very large, they can not easily shift positions, so we are seeing the decline in funds performance.

      HDFC Fund 200 fund has also gone through this phase few years back, but now again it is best performing fund.

      At the most you can half your SIP’s in this fund and invest them in 1 another best ELSS such as DSP Blackrock or Reliance Tax saver, which are performing very best.

      Hope this helps.

Post a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Top