Investing in mutual funds requires a comprehensive assessment of various factors to determine their suitability and potential returns. The Axis Focused 25 Fund is an open – ended equity and equity – related mutual fund scheme, and here is an in – depth analysis of whether it is a good investment.
Fund Basics
Investment Objective: The primary investment objective of the Axis Focused 25 Fund is to generate long – term capital appreciation by investing in a multi – cap based concentrated portfolio of stocks in up to 25 companies.
Fund Size: As of a certain date, the fund size of Axis Focused 25 Fund was ₹14,086.94 cr, accounting for 10.85% of investment in its category.
Expense Ratio: The expense ratio of the fund is 1.73%, lower than the category average of 2.04%.
Investment Strategy Analysis
Multi – Cap Investment: The fund invests in multi – cap companies, which gives the fund manager the flexibility to choose stocks from different market capitalizations. This can help capture growth opportunities across various segments of the market. For example, investments in large – cap stocks can provide stability and relatively stable dividends, while mid – cap stocks may offer higher growth potential.
Sector Diversification: The Axis Focused 25 Fund invests in sectors like finserv, IT, consumer goods, automobile, and oil & gas. Such sector diversification can reduce the impact of poor performance in a single sector on the overall portfolio.
Performance Review
One – time Investment Returns:
1 Year: The fund had a 31.25% absolute return and 30.96% annualized return in one year, while the benchmark Nifty 500 TRI had a 36.63% return.
5 Years: With a 79.27% absolute return and 12.37% annualized return in five years, compared to the benchmark’s 16.35% annualized return.
10 Years: It achieved a 287.98% absolute return and 14.51% annualized return in ten years, and the benchmark’s annualized return was 15.92%.
SIP Returns:
1 Year: For a ₹1000 SIP started one year ago, the investment had a 15.13% absolute return and 29.02% annualized return.
5 Years: With a 37.83% absolute return and 12.78% annualized return in five years.
10 Years: It had a 94.59% absolute return and 12.77% annualized return in ten years.
Risk Assessment
Market Risk: As an equity – oriented fund, the Axis Focused 25 Fund is highly sensitive to market fluctuations. Factors such as changes in economic conditions, interest rates, and geopolitical events can significantly impact the fund’s performance.
Concentration Risk: The fund’s focus on a maximum of 25 stocks means that the performance is highly dependent on the performance of these selected stocks. If a few of the major holdings underperform or face significant challenges, it can have a substantial negative impact on the fund’s overall returns.
Liquidity Risk: In the case of a large number of redemption requests, the fund may face challenges in selling some of its less liquid holdings to meet the redemption requirements, especially if the market conditions are unfavorable.
Management Team
Mr. Jinesh Gopani has been managing the Axis Focused 25 Fund since June 7, 2016. He has rich experience in portfolio management with Birla Sun Life AMC. His past experience and expertise can potentially contribute to the effective management of the fund.
Suitability for Investors
Risk – Tolerant Investors: Investors with a high risk tolerance and a long – term investment horizon may find the Axis Focused 25 Fund suitable. Its multi – cap and focused investment strategy has the potential to generate high returns over the long term, but it also comes with higher volatility and risk.
Investors with Market Insights: Those who have a good understanding of macroeconomic trends and different sectors may be able to better assess the potential of this fund. They can use their knowledge to evaluate whether the fund’s investment direction aligns with their market outlook.
Diversification Seekers: For investors looking to diversify their equity portfolio, the Axis Focused 25 Fund can be a good addition. Its sector and stock selection can provide exposure to different areas of the market that may not be covered by other broad – based funds.
Conclusion
In conclusion, investing in the Axis Focused 25 Fund can be a good choice for some investors, but it is not without risks. Investors should carefully consider their financial goals, risk tolerance, investment horizon, and market outlook before making a decision.
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