Launched in 2009, the Axis Equity Long Term Fund is an ELSS offered by Axis Mutual Fund. Its primary mission – to help investors accumulate wealth through the power of equities over time. This ‘stay invested for the long run’ strategy makes it a good fit for those pursuing wealth creation over 3-5 years or more. In the following discussion, we’ll examine some critical aspects of how this fund operates – from its goal of delivering growth through stocks, to how it picks prospects, to real world results.
1. Investment Objective
As an ELSS fund, the primary investment objective of the Axis Long Term Equity Fund is to generate long-term capital appreciation from a portfolio that is substantially constituted of equity and equity related securities. The secondary objective is to generate consistent returns by investing in companies across market caps and sectors. The fund aims to identify opportunities through a bottom-up stock selection process and believes in holding high quality stocks for the long run.
2. Portfolio Strategy
The fund follows a research-based investment approach focusing on fundamentally strong companies across market caps. Stocks are chosen based on parameters like revenue growth, competitive advantage, return on capital employed and quality of management. Sectors/industries are selected based on economic trends, demand-supply dynamics and availability of opportunities. The fund maintains a diversified portfolio with exposure to large, mid and small-cap stocks.
The Axis Long Term Equity Fund’s performance has been strong. Since its 2008 inception, it has consistently beaten its benchmark, the Nifty 500 index, over different periods. Returns were an annualized 14.5% in the last 3 years versus the category average of 12%. The 5 and 10-year figures were 13% and 12% respectively. Value Research also ranked it fifth among all ELSS funds for returns in the past 3 years, demonstrating its competitive performance over the long-term.
4. Tax Benefits
Being an ELSS fund, investments of up to Rs. 1.5 lakh per financial year are eligible for tax deductions under Section 80C. Any capital gains or income generated from the ELSS fund are tax exempt as per current tax laws. This makes it an attractive investment option for first time investors looking to build a tax saving portfolio.
5. Comparison with Axis Mid Cap Fund
While the Axis Long Term Equity Fund focuses on a multi-cap approach, the axis mid cap fund takes a pure-play mid cap investment strategy. Mid and small-cap stocks tend to have higher growth potential compared to large caps. However, they also carry higher risks. Investors with a higher risk appetite and investment horizon of 5-7 years can consider the Axis Mid Cap Fund for superior long term returns.
To summarize, the Axis Long Term Equity Fund is a suitable investment for investors looking to create wealth over the long run in a tax efficient manner. Backed by a seasoned fund manager, a diversified portfolio approach and a strong performance track record, it has been one of the top performing ELSS funds. For investors looking for a direct equity mutual fund investment, the Axis Long Term Equity Fund deserves consideration. Investors can also consider investing via platforms like 5paisa to benefit from low cost transactions.