AssetPlus NFO Review: Axis Value Fund

by Anushi Jain

Axis Mutual Fund has launched an NFO, which is open for subscription from September 2nd, 2021 to September 16th, 2021.

Investment Objective: The investment objective of the scheme is to provide capital appreciation by investing in an underlying fund of equity and equity related instruments and managing it using the principles of value investing

Benchmark: S&P BSE 200 TRI

Fund Philosophy:

Valuations

  • The fund looks for companies trading at lower multiples in their industries
  • The fund also selects companies that are expecting management turn-around, sector shifts, etc

Fundamental factors

  • Opportunity to advance ROE during cycles
  • Potential for earnings growth in the  long-term
  • Avoid companies with high debt
  • Avoid value traps

Medium to long term focus

  • Create wealth through multiples re-rating and playing cycles

Risk Management

  • Focus on portfolio risk and effectively manage it.
  • Re-allocate from stocks once they get re-rated

Portfolio Construction

Market cap: Can invest across all market caps without any restrictions

Sector: No sectoral restrictions

Current Allocation:
Large Caps - 50-80%
Mid and Small Caps - 20-50%

Based on our analysis, we have observed the following tax advantages and who the fund is suitable for investors looking to:

  • Capture the long-term appreciation of stocks which have the potential to improve and re-rate
  • To play a contrarian or a value strategy

Why should you invest?

  1. Suitable for the current high market valuations
  2. Strong fundamentals in place which will help avoid value traps
  3. Value stocks are usually lower in risk and volatility during market downturns
  4. Provides style diversification in growth-oriented portfolios

Value stocks have made a comeback in the last few months after a long period of underperformance. With current market levels at a high, value stocks may give higher risk-adjusted returns than growth stocks over the next few years. Equity investors with conservative to moderate risk appetite can add a value fund in their portfolio as a diversification tool. .

"Price is what you pay, value is what you get" - Ben Graham

It is of utmost importance that the fund should be discussed with your financial advisor and then ascertain whether it is suitable to invest. Always read the scheme documents fully before investing.