Axis Special Situations Fund: Looking to Create Wealth with Innovators

Dec 14, 2020

"Change is the only constant" - Greek Philosopher, Heraclitus

Every now and then, a disruption changes the way a company or sector routinely manages it operations. While disruptions can push certain companies to the verge of extinction, there are those that use such situations as a learning curve to constantly re-invent and adapt their businesses to the changing environment and be future ready. Such companies/industries that evolve dynamically can prove to be valuable investment opportunities.

Over the past few years, companies have witnessed an acceleration in disruptive change due to growth in technological power coupled with regulatory changes (GST, UPI, etc.). Moreover, private equity firms are actively looking to promote new and innovative business models.

In the wake of this, Axis Mutual Fund has launched Axis Special Situations Fund. The fund house is of the view that disruptive growth is not limited only to disruptors - it creates opportunity across the entire value chain that could include enablers (companies that are facilitating the change) and adaptors (incumbents who positively respond to the changed reality).

As a thematic fund, Axis Special Situations Fund has a mandate to invest minimum 80% of its assets in equity & equity related instruments following special situations theme. The performance benchmark index of the fund is Nifty 500 Total Returns Index.

Axis Special Situations Fund is an open-ended equity scheme that will seek to generate long-term capital appreciation by investing in mis-priced stocks facing special situations following a multi cap and multi sector approach. However, there is no assurance or guarantee that the investment objective of the scheme will be achieved.

Table 1: Details of Axis Special Situations Fund

Type An Open ended Equity Scheme following special situations theme Category Thematic Fund
Investment Objective To generate long-term capital appreciation by investing in mis-priced stocks facing special situations. The mis-pricing of stocks can occur due to companies facing special situations like regulatory/policy changes, management restructuring, technology led disruption and innovation or any temporary challenges in the operating environment. However, there can be no assurance that the investment objective of the Scheme will be achieved.
Min. Investment Rs 5,000 and in multiples of Re 1 thereafter Face Value Rs 10/- per unit
  • Direct
  • Regular
  • Growth
  • Dividend
Entry Load Not Applicable Exit Load
  • - An Exit Load of 1% is payable if Units (in excess of 10% of units allotted) are redeemed / switched-out within one year from the date of allotment;
  • - Nil if Units are redeemed / switched-out after one year from the date of allotment
Fund Manager
  • - Mr Ashish Naik
  • - Mr Hitesh Das
Benchmark Index Nifty 500 (Total Returns Index)
Issue Opens: December 04, 2020 Issue Closes: December 18, 2020
(Source: Scheme Information Document)

Investment strategy - Axis Special Situations Fund

Axis Special Situations Fund will look for opportunities to capture value created by disruptive growth. The disruption could be due to special situations like regulatory/policy changes, management restructuring, technology led disruption and innovation, or any temporary challenges in the operating environment, resulting in mis-pricing or unanticipated growth potential of stocks.

The fund will look to invest in stocks that are:

  1. Benefiting from disruptive change (disruptors, enablers, adaptors) on account of technology, regulatory, or any other factors;

  2. Witnessing a significant turnaround potential from a prolonged cyclical slowdown.

The opportunities could be available at company level and/or industry/sector level in domestic or overseas market. Given below are some of the special situations in which the scheme will seek to invest:

1) Shift from unorganized to organized

2) Change in lifestyle aspiration leading to premiumisation

3) Technology led disruption in business model

4) Effect of internet/ digital delivery channels on traditional businesses

5) Business process innovation

The fund manager will identify any other special situation from time to time and make investments in such companies, industries/ sectors and markets. The fund's investment in overseas securities will be restricted to maximum 35% of its net assets.

Under normal circumstances, the fund's asset allocation pattern will be as under:

Table 2: Asset Allocation of Axis Special Situations Fund

Instruments Indicative Allocation
(% of assets)
Risk Profile
Minimum Maximum High/Medium/Low
Equity and Equity related instruments of special situations theme 80 100 High
Other Equity and equity related instruments 0 20 High
Debt securities and money market instruments 0 20 Low to Medium
Units of REITs & InvITs 0 10 Medium to High
(Source: Scheme Information Document)

​Who will manage Axis Special Situations Fund?

Axis Special Situations Fund will be managed by Mr Ashish Naik (for equity portion) and Mr Hitesh Das (for foreign securities).

Mr Ashish Naik is Fund Manager - Equity at Axis Mutual Fund. Mr Naik has a MBA from XLRI, Jamshedpur and B.E. from Mumbai University. He is also CFA Charter holder and FRM. Mr Naik has over 13 years of experience of which over 8 years are as Equity Analyst. In the past, he has worked as Business Analyst for Goldman Sachs India Securities for two years and as a Software Engineer with Hexaware Technologies.

Mr Naik is the co-fund manager for Axis Regular Saver Fund, Axis Triple Advantage Fund, Axis Equity Hybrid Fund, Axis Children's Gift Fund, and manages Axis Capital Builder Fund - Series 1, Axis Nifty 100 Index Fund, and Axis Banking ETF.

Mr Hitesh Das is Research Analyst - Equity at Axis Mutual Fund. Mr Das has a Bachelors in Technology, Masters in Technology, and Post Graduate Diploma in Management from IIM Lucknow. He has over 9 years of experience in financial markets. Previously, he has worked as Equity Research Analyst at Credit Suisse, Equity Research Analyst at Ebusinessware, and Risk Analyst at Yes Bank.

Mr Das is the co-fund manager for Axis Growth Opportunities Fund and Axis ESG Equity Fund.

Fund outlook - Axis Special Situations Fund

Axis Special Situations Fund will invest a minimum 80% of its assets in mis-priced stocks facing special situations arising due to changing consumer behaviour, technological change, global events, changing company/sector dynamics, regulatory changes, etc.

The fund's performance will depend on the fund manager's ability to identify potential beneficiaries of structural/technological shifts at an early stage. The fund will invest up to 35% of its assets in global securities based on disruption theme to minimize the risk.

Notably, the effect of these special situations on the companies' business model could be medium to long term in nature. Do note that lack of high-potential innovative companies could narrow the choice of stock selection resulting in a concentrated portfolio.

Invest in Axis Special Situations Fund only if you have a high-risk appetite and an investment horizon of at least 5 years.

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Warm Regards,
Divya Grover
Research Analyst

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