Axis Long Term Equity Fund: A Review

Axis Long Term Equity Fund is a tax-saving mutual fund scheme that invests predominantly in equity and equity-related instruments. It is an open-ended fund that falls under the category of Equity Linked Savings Scheme (ELSS). ELSS funds offer tax benefits under Section 80C of the Income Tax Act, 1961, up to a limit of Rs. 1.5 lakh per financial year. They also have a lock-in period of three years, which is the shortest among all tax-saving instruments.

In this article, we will review the features, performance, portfolio, and suitability of Axis Long Term Equity Fund. We will also compare it with some of its peers and provide a chart to illustrate its returns over different time periods.

Table of Contents

Features of Axis Long Term Equity Fund

The fund was launched on 29 December 2009 and has a track record of over 13 years.
The fund size as on 30 June 2023 was Rs. 31,187 crore, which makes it one of the largest ELSS funds in the industry.
The fund offers lower cost ratios than the category average of 1.9%, with 1.56% for the regular plan and 0.86% for the direct plan.
By making investments in reputable businesses with sound fundamentals and long-term growth strategies, the fund pursues its long-term goal of capital appreciation.
The fund has a diversified portfolio across market capitalizations, sectors, and themes. The fund’s exposure to stocks as of June 30, 2023, was 96.43%; its exposure to debt was 0.59%; and its exposure to cash and cash equivalents was 2.98%. The fund’s equity exposure included 58.97% exposure to large-cap businesses, 30.12% exposure to large-cap stocks, 9.52% to mid-cap stocks, and 1.39% to small-cap companies.
The fund has a low portfolio turnover ratio of 16%, which indicates that the fund manager does not churn the portfolio frequently and follows a buy-and-hold approach.
The fund is managed by Mr. Jinesh Gopani since April 2011. He has over 18 years of experience as a seasoned fund manager in the equities markets.

Performance of Axis Long Term Equity Fund

The fund has delivered consistent returns over the long term and has outperformed its benchmark (S&P BSE 200 TRI) and category average in most time periods.
The fund’s annualised return from inception is 15.71%, which is higher than the benchmark return of 13.36 percent and the category average return of 14.0 percent.
The fund has also performed well over the previous three years, with an annualised return of 17.89%, higher than the category average return of 15.63% but behind the benchmark return of 20.06%.
The fund has shown resilience during market downturns and has limited the downside risk for its investors. For instance, in the calendar year 2020, when the benchmark index fell by 10%, the fund managed to give a positive return of 21%. Similarly, in the calendar year 2018, when the benchmark index fell by 3%, the fund gave a positive return of 10%.

The following chart shows the growth of Rs.10,000 invested in Axis Long Term Equity

Axis Long Term Equity Fund is one of the most popular tax-saving mutual funds in India. It is an equity-linked savings scheme (ELSS) that invests predominantly in equity and equity-related instruments of companies across market capitalization and sectors. The fund offers tax advantages under Section 80C of the Income Tax Act and seeks to provide long-term capital appreciation for its participants.

In this article, we will review the performance, portfolio, risk, and suitability of Axis Long Term Equity Fund and see why it can be a good choice for your tax-saving and wealth creation goals.

Performance

Axis Long Term Equity Fund has delivered impressive returns since its inception in December 2009. The fund has consistently outperformed its benchmark (S&P BSE 200 TRI) and category (ELSS) average over various time periods. The fund has also shown resilience during market downturns and recovered faster than its peers.

The table below shows the annualized returns of the fund, benchmark, and category over different time horizons as on July 6, 2023.

Time Period	Axis Long Term Equity Fund	S&P BSE 200 TRI	Category Average
1 Year	20.77%	25.71%	23.61%
3 Years	17.89%	27.85%	24.97%
5 Years	10.48%	13.87%	12.08%
10 Years	16.91%	15.63%	13.50%
Since Inception	15.71%	14.08%	NA

Source: Moneycontrol

The chart below shows the growth of Rs.10,000 invested in the fund, benchmark, and category over the last 10 years.

As we can see, during the last ten years, the fund has generated a total return of 377.52%, which is higher than the returns of the benchmark (292.94%) and the category (248.54%). Accordingly, an investment of Rs. 10,000 made in the fund 10 years ago would now be worth Rs. 47,752, but an equivalent investment made in the benchmark or the category would now be worth Rs. 39,294 or Rs. 34,864, respectively.

The Sharpe ratio, a ratio of excess return per unit of risk absorbed by the fund, shows that the fund has also done well on a risk-adjusted basis. The higher the Sharpe ratio, the better the fund’s performance relative to its risk.

The table below shows the Sharpe ratio of the fund, benchmark, and category over different time horizons as on June 30, 2023.

Time Period	Axis Long Term Equity Fund	S&P BSE 200 TRI	Category Average
1 Year	-0.01	-0.03	-0.02
3 Years	-0.01	-0.03	-0.02
5 Years	-0.01	-0.03	-0.02
Since Inception	-0.01	-0.03	NA

Source: Value Research

As we can see, the fund has a slightly higher Sharpe ratio than the benchmark and the category over all time periods, indicating that it has delivered better returns for the level of risk taken.

Portfolio

Axis Long Term Equity Fund follows a bottom-up approach to stock selection, focusing on quality companies with strong growth potential and sustainable competitive advantage. The fund invests across market capitalization and sectors, with a preference for large-cap stocks that offer stability and visibility of earnings.

The fund has a well-diversified 37-stock portfolio as of June 30, 2023, with the top 10 holdings making up 54.69% of the total assets.

The table below shows the top 10 holdings of the fund as on June

What is the minimum investment in Axis Long Term Equity Fund?

The minimum investment amount for Axis Long Term Equity Fund is Rs.500 for both one-time and systematic investment plans (SIPs). This is applicable for both regular and direct plans of the fund³. There is no upper limit for investing in this fund. The three-year lock-in term for this fund, on the other hand, means that you cannot sell your units until three years have gone after the date of investment.

What is the expense ratio of Axis Long Term Equity Fund?

The expense ratio of Axis Long Term Equity Fund is the annual fee that the fund charges to its investors for managing their money. The expense ratio varies depending on whether you invest in the regular plan or the direct plan of the fund. The regular plan involves an intermediary such as a broker or a distributor, who gets a commission from the fund house. The direct plan does not involve any intermediary, and hence has a lower expense ratio.

As on June 30, 2023, the expense ratio of Axis Long Term Equity Fund was 1.56% for the regular plan and 0.81% for the direct plan. Accordingly, the fund house would deduct Rs. 1.56 or Rs. 0.81 in annual fees for every Rs. 100 invested in the fund.

The cost ratio of Axis Long Term Equity Fund is higher for the regular plan than the category average of 1.9% and lower for the direct plan than the category average of 0.9%. A lower expense ratio implies better returns over the long term, as less money is deducted from your investment. When choosing a fund, there are still other factors to consider, including as performance, risk, the fund’s portfolio, and suitability.

What is the lock-in period of Axis Long Term Equity Fund?

The lock-in period of Axis Long Term Equity Fund is three years from the date of investment. This means that you cannot sell or redeem your units before completing three years in the fund. This is applicable for all equity-linked savings schemes (ELSS) or tax-saving mutual funds, as they offer tax benefits under Section 80C of the Income Tax Act . After the lock-in period, you can withdraw your funds without any exit load or penalty. However, you should consider your investment goals and risk appetite before exiting the fund, as it is meant for long-term wealth creation.

Conclusion

In this article, we have reviewed Axis Long Term Equity Fund, a tax-saving mutual fund that invests predominantly in equity and equity-related instruments of companies across market capitalization and sectors. We have seen that the fund has delivered impressive returns over the long term, outperforming its benchmark and category average. We have also seen that the fund has a well-diversified portfolio of quality companies with strong growth potential and sustainable competitive advantage. We have also discussed the performance, risk, expense ratio, and lock-in period of the fund.

Here are some frequently asked questions (FAQs) about Axis Long Term Equity Fund:

Who should invest in Axis Long Term Equity Fund?

In addition, these investors need to be prepared for a three-year lock-in period and the potential for modest investment losses.
The fund is suitable for individuals who want to participate in a diversified equity fund that gives priority to high-quality companies with strong competitive advantages and promising future growth.How are investments made in the Axis Long Term Equity Fund made?Investments in the Axis Long Term Equity Fund can be made both offline and online.Axis Long Term Equity Fund investments can be made offline or online.

How to invest in Axis Long Term Equity Fund?

You can invest in Axis Long Term Equity Fund through online or offline modes. You can invest online through the official website of Axis Mutual Fund or through any online platform that offers mutual fund services. You can invest offline by visiting any branch of Axis Mutual Fund or any intermediary such as a broker or a distributor. You can invest in the fund through a one-time lump sum investment or through a systematic investment plan (SIP), which allows you to invest a fixed amount at regular intervals.

What are the tax implications of investing in Axis Long Term Equity Fund?

Investing in Axis Long Term Equity Fund can help you save tax under Section 80C of the Income Tax Act. You can claim a tax deduction of up to Rs.1.5 lakh per financial year for investing in this fund. However, you should note that this fund has a lock-in period of three years, which means you cannot sell your units before completing three years from the date of investment. If you sell your units after the lock-in period, you will have to pay long-term capital gains tax at the rate of 10% on the gains exceeding Rs.1 lakh per financial year.

What are the risks involved in investing in Axis Long Term Equity Fund?

Investing in Axis Long Term Equity Fund involves market risk, as the fund invests predominantly in equity and equity-related instruments, which are subject to price fluctuations due to various factors such as economic conditions, political events, corporate performance, etc. Because certain of the equities in the fund’s portfolio may be difficult to trade or may have low trading volumes, the fund may also be subject to liquidity risk. The fund may also face concentration risk, as it may have a high exposure to certain sectors or companies that may underperform or face adverse situations. The fund may also face regulatory risk, as any changes in the tax laws or regulations may affect its performance or returns.

How to track the performance of Axis Long Term Equity Fund?

You can track the performance of Axis Long Term Equity Fund by visiting its official website or any other online platform that provides mutual fund information. You may look for the fund’s net asset value (NAV), which is the cost per unit of the fund as of a particular date. You can also check the returns of the fund over different time periods and compare them with its benchmark and category average. You can also check the portfolio of the fund, which shows the holdings of the fund across sectors and market capitalization. You can also check the risk measures of the fund, such as standard deviation, beta, Sharpe ratio, etc., which indicate how volatile or risky the fund is compared to its benchmark or category.

We hope this article has helped you understand Axis Long Term Equity Fund better and make an informed decision about investing in it. Happy investing!