Axis Focused 25 Fund comes from stable of Axis Mutual Fund. Let’s review Axis Focused 25 Fund today to find if its worth to invest in this fund.
Some of the questions that I will try to answer are :
What is the category of Axis Focused 25 Fund ?
How is portfolio of Axis Focused 25 Fund?
How is performance of Axis Focused 25 Fund?
What does risk stats tell about Axis Focused 25 Fund?
Who is fund manager for Axis Focused 25 Fund?
What is USP of Axis Focused 25 Fund?
What is Tax Treatment of Axis Focused 25 Fund?
Are there better funds than Axis Focused 25 Fund? And finally
What is my opinion about Axis Focused 25 Fund?
So let us get started.
Disclaimer & Disclosure
Before you read the article – a disclaimer. Please note I am not advising you on any financial decision on Axis Focused 25 Fund. Please treat article as my personal view only. Also note currently I am NOT invested in Axis Focused 25 Fund. With that, let us get started with review.
What is Category of Axis Focused 25 Fund
As per SEBI guidelines, every fund falls in a category. This helps investor understand basic characteristics of that fund. It also helps compare one fund with others in same category.
You can see all the categories of mutual funds here. Axis Focused 25 Fund falls under category called Focused Fund.What is Focused Fund Category
SEBI definition is as follows. An open ended equity scheme investing in maximum 30 stocks (mention where the scheme intends to focus, viz., multi cap, large cap, mid cap, small cap).
So what does it really means to us. This fund will be investing in limited number of stocks. Rather than investing small percentage of money in large number of stocks, this will invest large amount in small number of stocks.
This is conceptually high reward and high risk approach also commonly called as focused approach.
In general suitable for aggressive investors who want to take additional risk in exchange for better returns. Let us now look at where fund invests its money or it’s portfolio.
Portfolio of Axis Focused 25 Fund
I think fund has aggressive style of investment. Fund follows growth investment strategy.
Be it sector allocation, capital bias or number of stocks, it has a bold approach of portfolio creation.
This will lead to good returns when call taken by fund manager turns out correct. You guessed it right what will happen when it goes wrong.And why do I feel like this?
Let us look at the Portfolio in detail as that is the bloodline of any mutual fund to say. Of course portfolio may change over time unlike blood in our body, I have seen generally investment style does not change as long as fund manager is same.
Let us first start with understanding asset allocation of fund.
See below table to understand asset allocation of Axis Focused 25 Fund. Being an equity fund, most of the money will be invested in Indian stocks.
As per scheme information document, it has ability to put up to 35% in debt. But that will be in rare scenario. Typically fund would be fully invested in Indian stocks.
|Asset||Typical % allocation|
|Equity||95 to 100 %|
|Debt, Money Market instruments, Cash & Equivalent||0 to 10 %|
Characteristics of Equity Allocation
|Additional||S&P BSE 200|
|Giant companies||68 %|
|Large companies||19 %|
|Mid cap companies||13 %|
|Small companies||0 %|
|Financial sector||36 %|
|Number of Stocks||24|
|Top 10 Stocks||60 % of your money|
|Top 5 Stocks||35 % of your money|
|Top 3 Sectors||62 % of your money|
If you see above table, you will understand the style of investment for this fund. Do not focus too much on specifics like exact percentage or exact sector but try to understand the pattern of investment style.
Actual numbers may vary when you are reading the article.
First thing to note is that portfolio is concentrated – number of stocks are limited to be around 25. This is in line with category objective and fund name “Focus 25”.
Just see how aggressive fund goes towards allocation. At times touching limit of 10% allowed by SEBI. Such type of fund will perform well when selection of companies works out well but will also take beating if selection goes wrong.
As per its benchmark ( Nifty 50 ), its bias is towards Giant and Large companies with some allocation to mid cap. So you should be aware, fund will perform well when large caps do well and will under perform when mid cap and small cap shine.
P/B & P/E ratios
These ratios give us some idea on style of investment. Tells us if it takes a value or growth investment style. It also gives glimpse if it has some head room compared to benchmark. With P/E of around 30 and P/B around 5, this fund according to me is strong growth oriented fund and not a value oriented fund. In simple language, it believes in investing companies with possibility of growth in coming years rather than “buy when cheap” strategy.
Performance of Axis Focused 25 Fund
Well, 95% of investors are only interested in Kitna return dega. So here it is. Fund is a consistent performer in its category. Last few years has been really good. It has been able to generate significantly better returns over its category average. So from that perspective, this is a good fund to invest in.Want to know more?
Let us look at rolling returns of this fund over 7 years period. Since it does not have 10 year period data, need to settle with 7 year. But even that is descent time period.
Returns of around 14% average are excellent according to me. Also worse case returns of around 10%. More than 46% time it returns more than 15%. I guess we can not ask more.
Except year 2014, fund has performed better than Category. Returns in last three years (since new fund manager took over) are much better and beating category comfortably.
This is good sign for any fund. Also in year 2018, when other funds in category turned negative, this fund hold on to its capital.
So overall fund manager seems to be taking correct calls. Good consistency in beating the category. But as with any other fund, this is not fund for every one. Look at worse month below and ask yourself if you can handle such situation. Only then think of investing in the fund.
This table should give you some perspective of worst period so you can check if you have stomach to hold your nerves when such situations come again in future. Let us now move to check risk characteristics.
Overall fund ticks most the the boxes in risk related statistical evaluation. Major factor is Alpha of fund which is significantly higher than category. Note of caution that standard deviation is high so it is a volatile fund. Risk adjusted returns has better than category and I think it deserves a thumbs up for same but suits only for those who can digest the higher volatility.Comparison of fund risk factors v/s that of category
Standard deviation of fund tells us about how far returns have moved from its mean or average. Basically how volatile returns have been. Less volatile, better for our heart. This fund has standard deviation of 18 v/s category average of 13.5. So you can say volatility of fund will be higher than other funds in category. Ask yourself if you have stomach for it?
Beta tells us how Fund behaves compared to its Benchmark or Index. Benchmark index is considered to have beta of 1. The closer the value of Beta of fund to 1, more closely fund likely to follow benchmark. Fund has beta of 0.86 which means it is around 86 % co related to its benchmark (Nifty 50). This I feel is due to the fact that fund also invests some part in Mid cap companies. Since currently ( in 2020 ), we have more risk of downside, lower beta value is good as fund may fall less than Nifty.
Alpha tells us how actually fund is creating returns over and above its expected beta value. So basically alpha tells us how Fund Manager is doing compared to Index. Higher the alpha, better the returns fund manager able to generate and worth the fee that he or she is charging. And this is the area where this fund shines. Alpha of 1.7 v/s category average of -1 (negative 1). So this tells us fund manager is really able to take good calls and provide good returns compared to other funds in category.
Sharpe Ratio tells about risk adjusted returns or how much risk we are taking by investing in fund over a guaranteed return product. Fund has sharpe ratio of 0.13 compared to category average of -0.1. Again, fund has better risk adjusted returns compared to the category. This is good sign.
This is another ratio to check risk adjusted returns. Difference to Sharpe ratio is that we use Beta instead of Standard deviation for calculation. Fund has 0.03 value compared to category average of -0.02. Again better risk adjusted returns.
Other things that matter
|Launch date (Age)||June 2012|
|Assets (Rs)||Around 9500 Crore|
- 8 years is not really a long period for a mutual fund. So still a young fund. We haven’t see how it performs in Crisis like 2008 as it was not there. Now Corona crisis ( 2020 ) will show us its true crisis handling capabilities.
- Good asset under management. This is indirect proof of investors trusting the fund. Should give you some comfort feeling. However being one of the top AUM in category also has some drawbacks. Fund that performed well when AUM was less, may not perform equally well with lot of money flowing in. I feel however being Large cap biased fund, it still has some head room.
Fund Manager of Axis Focused 25 Fund
Mr Gopani has shown overall good stock selection but for me it is too early to fully judge him as he took over fund around 4 years back. So I will take a neutral view at this stage.More on fund manager
Mr Gopani is experienced fund manager. Since he took over charge of this fund, we see returns are better than category. So we can say his calls has been more often correct than not. One caution though. I prefer funds with much longer duration of same fund manager. This is not case here. With just less than 5 years in charge, we have less time to judge him fully. Also fund has not seen crisis like 2008. So 2020 corona crisis is first real crisis for the fund. May be a year down the line, we could be in better position to judge him. I would really like to see how he sails the ship during the storm. After all he is captain of the ship,
USP of Axis Focused 25 Fund
Tagline of fund is “It takes lot of focus to identify the unique. Isn’t it”. Unfortunately, even after lot of focus on various aspects of this fund, I could not spot its uniqueness. Period.more...
According to me there is nothing unique as such in this fund compared to other funds in its category. I see stock selection by fund manager has turned out to be good more often. Returns in last few years have been really good compared to category average. Fund is mainly a large cap fund with some exposure to mid cap. So if you don’t want to do fishing in small companies with your money, this fund serves the purpose well.
Peers of Axis Focused 25 Funds
As with any other category, there is no dearth of competition here as well. Review of Axis Focused 25 Fund would be incomplete without mention of some of its peers.
There are few funds which will give it run for money. Some of the funds that you should check out before investing are
- SBI Focused Equity Fund – You can click to read my review. This has better asset allocation in a focused fund category. So if you want exposure to Large cap, Mid cap and to some extent even Small cap companies, this could be for you.
- Motial Oswal Focused 25 Fund – You can click the link to read review but I think Axis Focused 25 Fund is better option.
- Franklin Focused India Equity Fund,
- Aditya Birla Sunlife Focused Equity Fund
Tax Treatment of Axis Focused 25 Fund
Axis Focused 25 Fund is treated as an Equity Fund from tax treatment perspective. So it enjoys current tax benefits.Tax treatment of mutual funds in India
- Tax on Funds coming under Equity Fund category – Long Term capital gain will be taxed at 10% on gains of over Rs 1 lakh in a financial year. If equity investments are sold before a year, the returns are treated as short-term capital gains and taxed at 15 per cent.
- Funds coming under Debt Fund category – Long term capital gains will be taxed 20% with Indexation (if held for more than 3 year) or Short term capital gains will be taxed as per your income tax slab (if held for less than 3 years)
Please consult a CA for current tax rules and liability since there could be changes when you are reading this article.
Other useful informationOther details
|Minimum Investment (Rs)||5000/-|
|Minimum SIP (Rs)||500/-|
|Expense Ratio (%)||1.73 for regular plan & |
0.65 for direct plan *
|Any Lock-in condition||No|
- * More than 1% benefit in a direct plan. If you are still on regular plans, you can read my review of Kuvera and start investing in direct plans.
- ** Exit Load of 1% if redeemed / switched-out within 1 year from the date of allotment. In line with most of equity schemes.
SummaryLet us conclude review with ten point summary of Axis Focused 25 Fund
- Belongs to Focused Fund – Suitable for aggressive style investors who want to invest in focused manner ( less stocks ) in hope of better returns compared to more diversified mutual funds.
- Concentrated portfolio – As name suggests, fund will be investing in around 25 stocks or companies. Style of investment is Growth. Bold to take positions.
- Asset allocation – Aggressive styled large cap oriented
- Consistent performer beating category
- Better risk adjusted returns – High Alpha but high standard deviation as well.
- Experienced fund manager but taken charge of fund just 4 years back
- Nothing unique in theme of fund but fund selections has been proved correct
- Relatively young fund but high on Asset Under Management
- Benefits of Equity funds from taxation perspective
- No lock in
My personal view is this is definitely a very good fund in its category and worth to give a chance. But however good it may be, no fund is suitable for every one. You should be asking few questions yourself to check if this is right fund for you. You should be considering this fund if you
- believe in concentrated approach of investing – less the stocks, better the returns
- prefer growth style over value style investing
- are not a conservative investor who believes in safety over returns. Make sure are not Raju Rastogi in story of three idiots
- have stomach for extra volatility to get better returns
- are investing in this fund mainly from large cap exposure perspective – you may need another fund for good mid cap and small cap allocation
As you can see from above list, Axis Focused 25 Fund ticks most of the boxes for somewhat aggressive investor. One can definitely consider this fund as an option in their portfolio. Though it has higher volatility, it has consistently rewarded investors with better returns.
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