Nobody likes sharing their hard earned money with the tax man. The Government legitimately allows residents to save tax by legitimate means and encourage savings.
For tax saving purpose in India, one of the first mutual fund class to consider is the ELSS tax saving funds.
Today, we’ll review Axis Long Term Equity Fund which is among best ELSS funds in my opinion.
The fund is the best performer in ELSS category and gets CRISIL Rank 1 consistently for last 3 years.
Axis Long Term Equity Fund – Review
I always encourage readers to gain exposure to equity to beat inflation.Good ELSS funds offer both tax saving and long term capital appreciation in the hands of a good manager.
The Axis Long Term Equity Fund was earlier called as the Axis Tax Saver Fund. Once the current manager Mr. Jinesh Gopani took over, the fund has been renamed as Axis Long Term Equity Fund.
The performance of mutual fund mostly depends on the fund manager. That is why you need to keep an eye out for fund manager changes. The performance of fund will change for better or worse when manager changes.
The performance of Axis Long Term Equity Fund has done better once Mr.Jinesh Gopani took over in 2011.
The Axis Long Term Equity Fund was originally started in Dec 21, 2009. The minimum investment is Rs 500 and it is benchmarked against BSE-200.
At present, the fund currently manages assets/funds worth Rs. 5972 crores.
The entry and Exit Load on the funds – Nil.
As with all ELSS tax saving funds, Axis Long Term Equity also has 3 year lock in period. It offers upto Rs 1,50,000 deduction under section 80C of Income Tax Act.
Axis Long Term Equity – Returns& Performance
The performance and returns of Axis Long Term Equity has been among the best in the last 5 years. This also coincides with the turn of events from 2009 when Indian stock markets made their bottoms.
The returns for 1 year ,3 year, 5 year period are given below. The returns are annualized. I have also tried to calculate the SIP returns for a period of 5 years till date.
|Monthly SIP||Rs 5000|
|Amount Invested||Rs 3,05,000|
|Final Value||Rs 5,64,700|
The returns & performance of Axis Long Term Equity compared to benchmark for last 3 years @ one year intervals(2013-2015) is given below. CAGR(%) given is annualized return since inception in 2009.
As you can see, the fund has continuously outperformed the benchmark. It is one of the primary reasons for being top performer in ELSS category.
Sector Allocation & Holdings
It is also important to note that the fund has fairly diversified holdings. We can also see that the fund holds some high quality stocks as of today.
This is turn may translate into good returns in future as well for investors. Banking & Finance has the highest allocation. We can sense that this might have been done with the anticipation of economic recovery expected in nest 3-5 years time.
However if that happens or not is yet to be seen. The past performance of the fund may be better or worse and depends on how the underlying stocks perform.
|Banking & Finance||28%|
|Auto & Ancilliaries||12%|
|Engg & Cap Goods||7%|
|Food & Beverages||4%|
|Services & Others||7%|
The top 15 holdings of Axis Long Term Equity Fund are as follows. It has some top class companies like HDFC Bank, HDFC, TCS and some high growth companies like PI Industries, Bajaj Finance,Kotak Mahindra as top holdings.
A mix of stable blue chips and high growth companies should augur well for Axis Long Term Equity in the near future.If there are any changes in the portfolio, you can check the latest details here
I have tabulated some key risk management ratios for you. These help to understand how better the funds have been handled. Also the returns generated and volatility of the fund can be deduced from these ratios.
For eg., a beta of less than 1 means the fund has less risk compared to Benchmark index. If benchmark index grow by 100% then fund will grow 88% and same applies for fall.
|Portfolio Turnover in last 1 year||0.45 times|
Looking at the key ratio like SD, Beta, Sharpe ratio we can see that fund is better managed compared to most funds in the market.
As of Dec 2015, the P/E of the fund is close to 38 which is bit high. This is not surprising as there is a high demand for quality business and market has awarded high PE for them. This reflects on fund PE as well.
This high PE of Axis Long Term Equity indicates the near term returns might not be very attractive. However , the long term prospects still look good.
How to invest in the fund?
One can do so either from aggregators, distributors ie., Regular channel or through Direct Channeloption.
We suggest you use the Direct Option where there will be no commissions and you’ll have better returns. Purchase directly from Axis Mutual Fund.
Download Application Form (PDF ) for Axis Long term Equity . Fill up the form and send with cheque/DD and PAN card details. A folio number will be opened in your name once KYC compliant .
After that you can make regular investments though ECS or standing instructions from bank account. If you do need guidance on how to invest in mutual funds, let us know in comments below. If there are enough readers looking fo rthat, we’ll write a post on the same.
How much tax you can save
It depends on which tax bracket you fall under.
Assume Taxable Income is Rs 5,00,000 and you invest Rs 1,50,000 in Axis Long Term Equity mutual fund. So now your net-taxable Income is Rs 3,50,000. So you can save tax of Rs 15,000 in first year and Rs 45,000 in 3 years.
Below are my rating for the fund.
Fund Governance – 4.5/5
Long Term Growth Prospects – 5/5
Short Term Prospects – 3/5
Risk Management – 4.5/5
TOTAL RATING – 4.25/5
Does it deserve a place in your portfolio – YES
Please be aware that this is my personal opinion or review of Axis Long Term Equity Fund.
Based on past track record, this fund should be in your top 10 listing bucket from which you shortlist 3-4 funds for your mutual fund portfolio.
Disclaimer: We do not receive commissions for reviews. Above opinion is personal and should not be considered as substitute for professional advice. I’m not SEBI registered analyst. Past performance is no indicator for future performance.
Let us know your opinion if Axis Long Term Equity deserves a place in your portfolio and if you own the fund. If you think it does not, tell our readers why.