Last Updated on December 29, 2021 at 6:14 pm
This is a review of Axis Global Innovation Fund of Fund, an open-ended fund of fund scheme investing in Schroder International Selection Fund Global Disruption (aka underlying fund). The NFO period is between 10th to 21st May 2021.
Just eight months ago, the AMC had launched the Axis Global Equity Alpha Fund of Fund that invests in Schroder International Selection Fund Global Equity Alpha, a large cap oriented global equity fund. Our review (linked above) noted that the fund had a poor track record against MSCI World Net Index and the S&P 500 TRI and should be avoided.
We had found a similar situation with other international funds such as Franklin India Feeder – Franklin U.S. Opportunities Fund and ICICI Prudential US Bluechip Equity Fund. So here too, our main consideration is, how does the underlying fund of Axis Global Innovation Fund of Fund perform wrt its benchmark.
Schroder International Selection Fund Global Disruption: Axis Global Innovation Fund of Fund would invest in this fund managed by Schroders, an AMC domiciled in Luxembourg. According to the scheme prospectus, “The Fund aims to provide capital growth by investing in equity and equity-related securities of companies worldwide which benefit from disruption”.
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Disruption typically means innovation (whether due to technology or otherwise) which changes a particular industry by creating new markets, products or service
models. Disruption can be observed in many industries such as e-commerce, media & communications and banking & payments. The Investment Manager believes that companies benefitting from disruptive innovation, either as the disruptor or otherwise, can experience a rapid acceleration in, and durability of, growth. The Investment Manager seeks to invest in companies benefiting from
disruption before this is fully reflected in market expectations.
Benchmark: The AMC says the scheme does not have on but can be compared to the MSCI AC World (Net TR) index
The fund was only launched on Dec 12, 2018. It is baffling why Axis AMC choose such a new fund when they already have another similarly themed fund. The only reason I can think of is, SEBI rules place no limits on the fund of funds, and it is easy to attract AUM via its banking partner channels highlighting the international innovation card.
The underlying fund (class C) has an AUM of 337.62 million USD and a TER of 1.05%. As of March 31st 2021, these are the region-wise holdings.
- North America 61.6%
- Emerging Markets 14.6%
- Continental Europe 11.3%
- Japan 6.4%
- The United Kingdom 2.9%
- Pacific X Japan 2.7%
These are the top ten holdings.
- Alphabet Inc 4.5%
- Microsoft Corp 4.3%
- Amazon.Com Inc 3.6%
- TSMC 3.0%
- Apple Inc 2.6%
- Visa Inc 1.9%
- Blackrock Inc 1.9%
- Booking Holdings Inc 1.8%
- Texas Instruments Inc 1.7%
- ASML 1.7%
We compare the since inception performance of Schroder International Selection Fund Global Disruption C Accumulation USD with S&P 500 TR and Nasdaq 100 TR. These are only relevant indices for the Indian investors as they have index fund or ETF or Fund of fund choices for these indices.
Since its inception, the fund has just about managed to keep pace with Nasdaq 100 TR (total return). This performance is after expenses of the parent AMC. If we consider the expenses to be charged by Axis for investment in Axis Global Innovation Fund of Fund, the performance will fall further. The total expense of the Axis fund of fund is likely to be more than Motilal Oswal Nasdaq 100 Fund of Fund.
Therefore, give the short history of the underlying fund and its performance so far, we recommend that investors avoid the Axis Global Innovation Fund of Fund. An Indian investor looking for “some international diversification” is better off with Motilal Oswal S&P 500 Index Fund considering the lower expenses. Although it is not geographically diversified, it has a lower concentration risk and volatility than the Nasdaq 100. See: Motilal Oswal S&P 500 Index Fund: What return can I expect from this?
References
- Scheme Document of Axis Global Innovation Fund of Fund
- Fund Page of Schroder International Selection Fund Global Disruption C Accumulation