Axis Multicap Fund is an open-ended equity scheme investing across large cap, mid cap, small cap stocks. Launched in Nov 2017, it has beat its benchmark comfortably but already has raked in an AUM of Rs. 4850 Crores thanks to its Axis Bank connection. In this review, we look at the features of the fund and its portfolio history to find out if it can be considered for investment.
The fund was not affected by the SEBI Mutual Fund Categorization rules and only changed its benchmark from BSE 200 to Nifty 500 in May 2018. Although this gives the impression of a wider investment universe, it is not the case. It has only picked an easier benchmark to beat!
According to SEBI, multicap mutual funds have not market cap or sectoral limitations. They should only maintain 65% equity to comply with equity fund tax status. Axis Multicap Fund, in its short history, has behaved like a largecap mutual fund.
Marketcap History of Axis Multicap Fund
The fall in mid and small cap indices just three months after launch seems to have helped the fund. The fund manager -Shreyash Devalkar, who also manages Axis Bluechip and Axis Midcap (links points to fund reviews) – was quick to reduce mid and smallcap exposure while holding significant portion in bonds.
🔥Secure your future with our Robo-advisory tool trusted by over 3,000 investors and advisors. From effortless retirement planning to funding your children’s biggest dreams, turn your financial goals into reality. 🔥
SEBI should (among other things!) curb the practice of mutual funds offering “extra” information in scheme promotional material. For example, the scheme leaflet and scheme presentation both refer to the scheme having a largecap-tilt (50% to 100%). However, the scheme document (the only legally binding one) does not.
Both promotional materials refer to the investment strategy of the fund as the search for (1) stocks that are expected to grow faster than the benchmark and (2) stocks that are at an inflection point. An inflection point is one where the business changes direction for the better (or worse!)
It aims to first identify stocks with “Growth potential corresponds to sustainable earnings, growth potential, credible management and acceptable liquidity”. Then filter based on the following inflection indicators.
Market Share Gain due to Competitive Advantage
Industry Consolidation
Sunrise Industry
Improved management focus & Capital Allocation
Regulatory & Policy Changes
There is no mention of the above parameters and filters in the Axis Multicap Scheme document!
Expense Ratio History
This is the expense ratio history of Axis Multicap Fund. At 0.6%, the direct plan is fairly attractive but could be subject sudden hikes after significant inflows as see earlier: Why SEBI should stop frequent mutual fund expense ratio changes. Also, the regular plan expense is 2.05% pointing to a strong incentive for selling this fund. This can be a problem with regard to the AUM.
AUM Trend
The AMC was able to mobilize significant AUM 2000 Crores plus during the NFO period! Since then too, the growth has been quite brisk.
The fund should safely be able to tolerate a sudden AUM spike resulting in approximately 3X or so growth and this is possible because of the push from banks. The selling points of “ability to invest across the market cap and change it as per market conditions to lower risk and increase returns” can be used to push the fund in good times and bad.
Direct and Regular AUM Split Average Assets under Management (AAUM) for the quarter of July – September 2019 (Rs in Lakhs) (source AMFI)
Direct Plan – Dividend
7793.65
Direct Plan-Growth
23015.87
Regular Plan – Dividend
21746.12
Regular Plan-Growth
356588.83
Sector Allocation History
Besides the right change in market cap allocation, one can see below that the fund manager has also made some apt sector calls, reducing exposure to the automobile industry and financial services.
Performance
The fund in its short history has done quite well. Notice the huge impact of commissions – the big difference in direct and regular plan returns. The two-year returns show for the fund is approximate and as on 15th Nov 2019. The fund only completes two years as on 19th Nov.
Summary: Should You Invest or Stay Invested?
Axis Multicap is indeed an inviting prospect. A good fund manager with an impressive dossier, a low expense ratio for the direct plan (although possibly temporary) and good performance in its short history. The main problem is the possibility of rapid AUM growth thanks to banking channels.
At its current AUM level, the size problem is not immediate and existing investors can continue but to benefit must have significant exposure. New investors who either have an actual need for a multi-cap fund or are looking to restructure their portfolio can consider this fund.
Both types of investors must be aware of the risks specific to the fund (besides the usual ones): Possibility of increase in mid and small cap stocks; Too much dependence on the fund manager; future hike in direct plan expenses and sudden AUM influx affecting performance
Do share this article with your friends using the buttons below.
Use our Robo-advisory Tool to create a complete financial plan!More than 3,000 investors and advisors use this! Use the discount code robo25 for 20% off. Plan your retirement (early, normal, before, and after), plus non-recurring financial goals (such as child education) and recurring financial goals (such as holidays and appliance purchases). The tool helps anyone aged 18 to 80 plan for retirement, plus six non-recurring and four recurring financial goals, with a detailed cash flow summary.
Have a question? Subscribe to our newsletter using the form below.
Hit 'reply' to any email from us! We do not offer personalised investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Our flagship course!Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,500 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market conditions! Watch the first lecture for free! One-time payment! No recurring fees! Lifelong access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.Increase your income by getting people to pay for your skills!More than 900 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner seeking more clients through online visibility, or a salaried individual looking for side or passive income, we will show you how to do it by showcasing your skills and building a community that trusts and pays you. (Watch the 1st lecture for free). One-time payment! No recurring fees! Lifelong access to videos!Our book for kids: “Chinchu Gets a Superpower!” is now available!Both the boy and girl versions of "Chinchu Gets a Superpower". Most investor problems stem from a lack of informed decision-making. We made bad decisions and money mistakes when we started earning, and we spent years undoing them. Why should our children go through the same pain? What is this book about? As parents, what if we had to groom one ability in our children that is key not only to money management and investing but to every aspect of life? My answer: Sound decision-making. So, in this book, we meet Chinchu, who is about to turn 10. The story follows what he wants for his birthday and how his parents plan it, while also teaching him key ideas about decision-making and money management. What readers say!Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Freefincal is a News Media organisation dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact Information: To get in touch, please use our contact form. (Sponsored posts or paid collaborations will not be entertained.)
Published by CNBC TV18, this book helps you ask the right questions and find the right answers. It also includes nine online calculators, so you can create custom solutions tailored to your lifestyle. Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is designed to help young earners get the basics right from the start! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.
Your Ultimate Guide to Travel
This is an in-depth exploration of vacation planning, including how to find affordable flights, budget accommodations, and practical travel tips. It also examines the benefits of travelling slowly, both financially and psychologically, with links to relevant web pages and guidance at every step. Get the PDF for Rs 300 (instant download)
Create a complete financial plan with our Robo-advisor!
Trusted by 3500+ investors and advisors! Use code robo25 for a 20% discount!
