Axis Equity Fund: Why it has a 5-star rating among mutual funds schemes in India

By Sunil Fernandes
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     Axis Equity Fund: Why it has a 5-star rating among mutual funds schemes
    Axis Equity Fund is a diversified equity fund that was launched sometime in 2010. Most of the amount that is invested in the mutual fund scheme is invested in the equity markets.

    The Fund has top ratings from Value Research Online and Crisil

    While Crisil has rated the fund as number one based on various parameters, Value Research Online has also rated the scheme with a 5-star rating, which is the highest rating that it accords. Among the several parameters that Crisil Ratings uses while rating funds is the superior returns score or SRS. Based on this and several other parameters Crisil has rated the scheme as the number one along with Reliance Tax Saver.

    Why such a status for Axis Equity Fund?

    One of the important parameters that one uses is returns along with portfolio analysis and others. Now, in terms of returns Axis Equity Fund scores very highly. In the last three years the scheme has generated a return in excess of 21 per cent. There's no doubt that the Sensex and the Nifty has also rallied during the period, but, the scheme has managed returns better than some other peers and this may have more to do with its portfolio.

    The one year return is stupendous and is in excess of 43 per cent, again largely on account of its portfolio.

    So what does the portfolio comprise?

    The Axis Equity Fund has a portfolio that includes stocks like State Bank of India, ICICI Bank, HDFC Bank, Infosys, Larsen and Toubro and Maruti among several others. On careful examination of the portfolio it seems the scheme is more geared towards economy driven stocks like banking and infrastructure. What this means is for the scheme to continue to perform well the economy must do well, or else the returns could falter in the medium term.

    So, should you buy Axis Equity Fund?

    A large part of the portfolio comprises the stock of State Bank of India (SBI). There are a few worries with this stock like the high non performing assets. However, if SBI is able to manage to control its non performing assets, then the stock should do well and should help boost the net asset value (NAV) of Axis Equity Fund.


    The worry at the moment while buying mutual fund schemes is that like stocks the net asset value of mutual fund schemes have gone-up too fast. Like the Sensex there is almost an appreciation of 50 per cent in some of the NAVs. This makes the schemes very expensive. If the markets fall from the current levels, the NAVs could come down and that could be a good buying opportunity.

    What happens if the markets do not fall? In that case if you do not invest you would have missed the bus. But, it seldom happens that markets rise and do not fall. What goes up will come down. So, be patient and you could end-up buying Axis Equity Fund at a lower net asset value.

    Read more about: sensex nifty axis equity fund
    Story first published: Thursday, September 11, 2014, 8:46 [IST]
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