Last Updated on December 29, 2021
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.
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
Explore the site! Search among our 2000+ articles for information and insight!
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation for promoting unbiased, commission-free investment advice.Use our Robo-advisory Excel Template for a start-to-finish financial plan! Now with a new demo video! ⇐ More than 1000 investors and advisors use this!
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 2800 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 what the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 675 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 who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
My new book for kids: “Chinchu gets a superpower!” is now available!
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.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish mutual fund screeners and momentum, low volatility stock screeners .every month.
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. 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 from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our Youtube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions, seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! 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 dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)Free android apps
- All calculators from our book, “You can be Rich Too” are now available on Google Play!
- Install the Financial Freedom App! (Google Play Store)
- Install Freefincal Retirement Planner App! (Google Play Store)
- Find out if you have enough to say "goodbye" to your employer (Google Play Store)