Axis Long Term Equity Fund - Invest Online

A relatively new fund in a category of old-timers, Axis Long Term Equity has stood out for its category-leading returns in all of the five years since inception. The fund has been securely lodged at five stars in the rankings for the last three years. A purely growth-oriented fund, it picks stocks on a bottom-up basis for their industry leadership, pricing power and strong cash flows and good governance.

The fund's five-year return of 23.4 per cent beats the category by a 10 percentage point margin. This return has also been earned through consistent year-by-year outperformance and not in fits and starts. In tax-saving funds, which are a part of the multi-cap category, the allocations between large-, mid- and small-cap stocks can be pretty fluid with some funds. But this fund has maintained a 55-60 per cent large-cap tilt, 35-40 per cent mid-cap tilt, with a marginal small-cap allocation. The mid-cap weights are higher than peers'.

The fund's quality bias and focus on domestic themes have worked well to deliver high returns. The fund avoids highly regulated and cyclical sectors which have taken a battering in the market lately.

Overall this is a great fund to park your tax-saving investments. But while the quality filters applied by the fund may weed out risks relating to leverage or poor governance, valuations of the stocks in its portfolio are at a sizeable premium to the market. Therefore, the fund may not be immune to any stock market correction in the future.