Axis Long Term Equity Fund: Creating Dual Opportunities

Dec 24, 2020

The deadline for investing in tax-saving instruments for FY 2020-21 is fast approaching. If you have not yet started tax planning, it is time to seriously consider investing in worthy tax-saving instrument soon to avoid the last minute rush.

If tax planning is viewed as part of your financial plan at the start of a financial year, it can not only help us save taxes but also help in achieving our financial goals. Therefore, just like investment in any other instruments, tax-saving instruments too should be selected after thorough research of various options available as well as careful evaluation of our financial needs.

One of the most worthy tax-saving instruments is Equity Linked Savings Scheme (ELSS), a diversified equity fund that provides investors the combined benefit of tax saving as well as wealth creation.

Axis Long Term Equity Fund (ALTEF) is an ELSS known for generating superior returns as compared to its benchmark and category peers.

Graph 1: Growth of Rs 10,000 if invested in Axis Long Term Equity Fund 5 years ago

ALTEF is the most popular fund in the ELSS category due to its superior performance record. The fund focuses on investing in quality businesses having long term earnings growth prospects. It seeks opportunities predominantly in large caps with significant allocation to mid-caps through bottom-up stock picking approach. ALTEF has showcased impressive performance since its launch and rewarded its investors by generating significant alpha over its benchmark. It has managed to limit downside in bear phases and participated well in bull phases to deliver reasonable returns. In the last 5 years, ALTEF has generated compounded return of 15%, as against 13% CAGR clocked by the benchmark index. An investment of Rs 10,000 in the fund five years back would now have grown to Rs 20,142 whereas a simultaneous investment in its benchmark would now be worth Rs 18,386.

Graph 1
Data as on December 23, 2020
(Source: ACE MF)

Table: Axis Long Term Equity Fund's performance vis-à-vis category peers

Scheme Name Corpus (Cr.) 1 Year (%) 2 Year (%) 3 Year (%) 5 Year (%) 7 Year (%) Std Dev Sharpe
Canara Rob Equity Tax Saver Fund 1,333 24.99 18.98 13.31 14.34 16.32 20.85 0.132
Axis Long Term Equity Fund 25,618 17.84 17.23 12.63 15.02 20.25 20.80 0.120
Mirae Asset Tax Saver Fund 5,044 20.14 18.22 11.49 -- -- 22.75 0.115
Invesco India Tax Plan 1,280 16.74 14.40 9.25 13.73 18.17 21.13 0.084
JM Tax Gain Fund 45 15.71 16.17 8.77 15.08 17.90 23.10 0.082
Kotak Tax Saver Fund 1,445 14.47 14.48 8.17 13.56 17.22 21.74 0.072
Union Long Term Equity Fund 299 18.53 15.29 7.99 10.01 12.41 21.05 0.069
UTI LT Equity Fund (Tax Saving) 1,558 18.65 15.27 7.48 11.97 14.49 21.92 0.064
ICICI Pru LT Equity Fund (Tax Saving) 7,277 11.67 10.66 7.42 10.90 15.15 22.38 0.060
BNP Paribas Long Term Equity Fund 488 16.05 16.57 7.39 11.21 15.85 19.28 0.062
S&P BSE 200 - TRI 14.41 13.12 8.72 12.94 14.03 22.14 0.078
Returns are point to point and in %, calculated using Direct Plan - Growth option. Those depicted over 1-Yr are compounded annualised.
Data as on December 23, 2020
(Source: ACE MF)
*Please note, this table only represents the best performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.

ALTEF has showcased an impressive performance across time periods and it rewarded investors by generating significant alpha over its benchmark - S&P BSE 200 - TRI. On a longer 5-year and 7-year return period, the fund has managed to outpace the benchmark index by a significant margin, and has also fared better than many of its prominent category peers. On a shorter time horizon, it has managed to maintain a superior lead over its peers and the benchmark.

ALTEF has shown a fair level of stability even in extreme conditions. Its standard deviation of 20.05% denotes lower volatility compared to the category average and its benchmark. Its risk-adjusted return (Sharpe Ratio) is among the best in the category and clearly surpasses that of the benchmark.

Investment strategy of Axis Long Term Equity Fund

Classified under ELSS Funds category, ALTEF is mandated to invest at least 80% of its assets in equity and equity related instruments. The scheme endeavours to remain fully invested in equity and equity related instruments at all times.

ALTEF has the flexibility to invest across market capitalisation, but it prefers to maintain a large cap bias with a significant allocation to midcaps. Though the funds benchmark is S&P BSE 200, the investment is not limited to the companies constituting the benchmark. The fund is completely benchmark agnostic when it comes to stock and sector selection.

Belonging to a fund house that gives high preference to growth, ALTEF invests in a diversified portfolio of strong growth companies with robust business models and sustainable competitive advantage. Accordingly, the portfolio is built utilising the bottom-up stock selection process, focusing on the appreciation potential of individual stocks from a fundamental perspective. While picking stocks the fund management aims for companies that are high quality leaders, have solid growth, impeccable execution, strong finances, especially decent Operating Cash Flows and less geared.

Graph 2: Top portfolio holdings in Axis Long Term Equity Fund

Graph 2 Graph 2
Holding in (%) as on November 30, 2020
(Source: ACE MF)

ALTEF usually holds a compact portfolio of around 30 to 35 stocks, something that is uncommon for funds with large corpus. As November 30, 2020, ALTEF held about 32 high conviction stocks in its portfolio. The top 10 holdings in the portfolio accounted for a major 63% of its assets. Bajaj Finance is the top holding in the portfolio having an allocation of 9.7%, followed by HDFC Bank with an allocation of 7.9%. The other stocks in the top 10 holding carry exposure in the range of 4-7% of the assets. Most stocks in the portfolio have been held for a period of more than 3 years.

In the last one year the fund has benefited immensely from its exposure in companies like Info Edge (India), TCS, Bajaj Finance, Divis Laboratories, Avenue Supermarts, Kotak Mahindra Bank, HDFC Bank, etc. It also benefitted from its holdings in Nestle India, Pidilite Industries, Astral Polytechnik, Torrent Power, among others.

ALTEF invests in a mix of cyclicals and defensives. It has placed heavy bets on Banking and Finance that together account for around 36% of its total assets. Infotech has the next highest allocation, followed by Pharma, Consumption, Auto, Retailing, Chemicals, Auto Ancillaries, and Power. Axis as a fund house avoids investing in PSUs, highly cyclical and highly regulated sectors.


ALTEFF has a very impressive track record of generating superior long term returns as compared to its benchmark and many of its category peers. The fund management resists from engaging in undue risk and focuses on quality stocks with high growth potential to limit downside. Although ALTEF holds a compact portfolio, it is not too concentrated to any selective stocks. However, on a broader allocation, the exposure to a few sectors like Financial Services and Infotech is considerably high, which can result in short term volatility if these sectors witness a rough patch.

Mr Jinesh Gopani has been at helm of the scheme since 2011, whose convictions have played out well in the past and are expected to do so in the future as well. This makes ALTEF suitable for investors with high risk appetite and an investment horizon of at least 5 years.

Warm Regards,
Divya Grover
Research Analyst


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Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.


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About the Company including business activity

Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989.

QIS was promoted by Mr Ajit Dayal with an objective of providing value-based information/views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.

'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name for providing information on mutual funds and personal financial planning, financial markets in general, etc. and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services.

Quantum Information Services Private Limited (QIS) is registered as Investment Adviser under SEBI (Investment Adviser) Regulations, 2013 and having Registration No.: INA000000680. In terms of the second proviso to Regulation 3 (1) of SEBI (Research Analysts) Regulations, 2014 the Company is not required to obtain Certificate of registration from SEBI.

Disciplinary history

There are no outstanding litigations against the Company, its subsidiaries and its Directors.

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Details of associates

  1. Money Simplified Services Private Limited;

  2. PersonalFN Insurance Services India Private Limited;

  3. Equitymaster Agora Research Private Limited;

  4. Common Sense Living Private Limited;

  5. Quantum Advisors Private Limited;

  6. Quantum Asset Management Company Private Limited;

  7. India Private Limited;

  8. HelpYourNGO Foundation;

  9. Natural Streets for Performing Arts Foundation;

  10. Primary Real Estate Advisors Private Limited;

  11. HYNGO India Private Limited;

  12. Suresh Lulla;

  13. I V Subramaniam.

Disclosure with regard to ownership and material conflicts of interest
  1. ‘subject company’ is a scheme on which a buy/sell/hold view or target price is given/changed in this Research Report;

  2. Neither QIS, it's Associates, Research Analyst or his/her relative have any financial interest in the subject Company; except for one of the Research Analysts holding units of Axis Long Term Equity Fund;

  3. Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report;

  4. Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However, any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront / annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices.

Disclosure with regard to receipt of Compensation
  1. Neither QIS nor it's Associates have received any compensation from the subject Company in the past twelve months;

  2. Neither QIS nor it's Associates have managed or co-managed public offering of securities for the subject Company;

  3. Neither QIS nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject Company;

  4. Neither QIS nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.

  5. Neither QIS nor it's Associates have received any compensation or other benefits from the subject Company or third party in connection with the research report

General disclosure
  1. The Research Analyst has not served as an officer, director or employee of the subject Company.

  2. QIS or the Research Analyst has not been engaged in market making activity for the subject Company.

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Quantum Information Services Private Limited CIN: U65990MH1989PTC054667 Regd. & Corp. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021 Website: Tel.: 022 61361200 Fax.: 022 61361222 SEBI-registered Investment Adviser. Registration No. INA000000680, SEBI (Investment Advisers) Regulation, 2013

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