The fund has consistently outperformed the benchmark (Nifty 50 TRI) and its category (funds ranked under the ‘focused funds’ category in March 2018 CMFR) in all timeframes under analysis.
The fund outperformed the category and benchmark in the last two market phases—it checked losses better than the category and benchmark during the Chinese slowdown (March 2015 to February 2016), and logged an outperformance of over 8 per cent during the rally of March 2016 to June 2018, which was led by global liquidity and domestic reforms.
An investment of Rs 10,000 in the fund on June 29, 2012 (inception of the fund) would have grown to Rs 28,510 on July 10, 2018, implying an annualised return of 18.97 per cent. That beats the category and the benchmark, where a similar investment would have grown to Rs 25,662 (16.91 per cent per annum) and Rs 22,333 (14.25 per cent per annum), respectively.
Investors seeking a disciplined approach can opt for a systematic investment plan (SIP), wherein they invest a certain amount at regular intervals. Axis Focused 25 Fund is an attractive choice for such investment, as it returned substantial gains over the benchmark across the timeframes considered.
In the past three years, the fund maintained an average allocation of 95.67 per cent to equities, predominantly to large-cap stocks (66.6 per cent). It took exposure to 64 stocks and being true to label, kept the size of its monthly equity portfolio at an average of 24 stocks.
It took exposure to 20 sectors during the three years, the top five being banks (with average allocation of 17.07 per cent), finance (15.09 per cent), software (8.07 per cent), autos (7.51 per cent), and auto ancillaries (7.45 per cent). The biggest contributors to the fund’s performance were HDFC Bank and Kotak Mahindra Bank in the banking sector during the period under analysis. Bajaj Finance and Bajaj Finserv were the top contributors from the finance sector; Info Edge in the software sector; and Maruti and Endurance Technologies in the auto and auto-ancillaries sectors, respectively.
The fund increased its allocation to the finance sector from 8.55 per cent as of April 2016 to 22.19 per cent as of November 2017. During the period, Nifty Financial Services TRI grew 56.48 per cent (in absolute terms), while the broader market, represented by Nifty 50 TRI, increased 33.34 per cent. Since then, however, allocation to the finance sector has fallen to 19.47 per cent on average through May 2018.
Allocation to the software sector declined from 12.29 per cent as of January 2016 to 2.81 per cent as of March 2017. During this period, the Nifty IT TRI declined 3.36 per cent (absolute), while the Nifty 50 TRI grew 23.22 per cent. Since then, allocation to the software sector has increased to 12.61 per cent as of May 2018, given the recovery in the sector. The Nifty IT TRI grew 30.53 per cent (absolute) between March 2017 and May 2018, while Nifty 50 TRI grew 18.89 per cent, indicating an accurate call.
Over the past three years, the fund has consistently held six stocks, accounting for an exposure of 30.05 per cent on average. All these stocks have outperformed the fund’s benchmark during this period. Among these, Bajaj Finance, Kotak Mahindra Bank and HDFC Bank were the top contributors to its performance.