Axis Triple Advantage Fund: Offering Benefit of Diversification Across Asset Classes

Multi-Asset Funds aim to generate modest capital appreciation while strategically reducing the overall risk from a combined portfolio of assets with low-correlation (usually equity, debt, and gold). The low correlation among assets enables Multi-Asset Funds to protect the downside risk during uncertain economic conditions and volatile markets and generate better risk-adjusted returns.

Axis Triple Advantage Fund is one such Multi-Asset Fund that has stood strong during bearish phases and has rewarded its long-term investors with superior risk-adjusted returns.

Data as on January 25, 2022
(Source: ACE MF)

Axis Triple Advantage Fund has stood among the top performers in the Multi-Asset Fund category across various time frames in the past. In the last 2-year and 3-year periods, Axis Triple Advantage Fund has outperformed the category average by a noticeable margin of 2-4 percentage points. Even over the longer 5-year and 7-year periods, Axis Triple Advantage Fund has maintained a decent lead over most of its peers. It has also fared better compared to the CRISIL Hybrid 35+65 Aggressive index.

On the risk-return parameters, Axis Triple Advantage Fund has encountered volatility of 15.45% which is nearly in line with the category average of 15.96%, though slightly higher than the hybrid index (14.46%). The fund's superior outperformance in the last few years has helped it rank higher on the risk-reward front. Its Sharpe of 0.28 is currently the highest in the multi-asset funds category, thus rewarding investors with superior risk-adjusted returns.

Investment strategy of Axis Triple Advantage Fund

Classified as a Multi-Asset Allocation Fund, Axis Triple Advantage Fund seeks to invest in a diversified portfolio of equity and equity-related instruments, fixed income instruments, and Gold ETFs. The fund usually invests 65%-80% of its assets in equities, 10%-30% allocation in debt and money market instruments, along with 10%-30% exposure in Gold ETFs.

The equity allocation in the portfolio is actively managed with the flexibility to invest across market caps. The fund follows the bottom-up stock selection process, focusing on the appreciation potential of individual stocks from a fundamental perspective. The universe of stocks in Axis Triple Advantage Fund is carefully selected to include companies having robust business models and enjoying sustainable competitive advantages as compared to their competitors, and that are available at a fair valuation.

For its fixed-income portfolio, Axis Triple Advantage Fund aims to invest in a diversified portfolio of high-quality debt and money market instruments. The fund manager invests in fixed income instruments taking into consideration the prevailing interest rate scenario & the liquidity of the different instruments.

It also invests in gold ETFs, as historically gold has shown to have a low correlation with other asset classes like equity and debt, making it a good asset for diversifying the overall portfolio.

As of December 31, 2021, Axis Triple Advantage Fund held 74.9% of its assets in equities with a predominant exposure to large-cap stocks. It held 42 stocks in its portfolio. The top-10 stocks accounted for around 41% of its assets, of which 5 belong to the Banking & Finance sector. Infosys topped the list with an exposure of around 5.9%, followed by TCS, ICICI Bank, Bajaj Finance, and Avenue Supermarts, having an allocation of around 4% to 5.5% each. Most of these stocks have been part of the fund's top holdings for over two years now.

In the last one year, Axis Triple Advantage Fund has gained immensely from its holding in Bajaj Finserv, Infosys, Avenue Supermarts, Bajaj Finance, ICICI Bank, TCS, Gland Pharma, among others.

In terms of sector holdings, Axis Triple Advantage Fund's portfolio is skewed towards Banking & Finance stocks where it has allocated 24.2% of its assets, followed by Infotech with an allocation of 12.5%. The other core sectors in the fund's portfolio include Retail, Engineering, Pharma, and Auto Ancillaries having allocation in the range of 4%-7%. Though Axis Triple Advantage Fund's portfolio is skewed towards cyclical, it has a significant diversification towards defensives and sensitive sectors.

Axis Triple Advantage Fund held 7.6% of its assets in debt instruments, which include allocation of 4.5% in moderate to high rated Corporate debt, and 3.1% in government securities. The average maturity profile of the debt portfolio has been in the range of 2-7 years in the last one year exposing the portfolio to slightly higher interest rate risk. The fund held an allocation of 10.5% in gold in the form of Gold ETF for diversification to gold as an asset class.

Suitability

Axis Triple Advantage Fund holds a well-diversified portfolio invested across asset classes viz. equity, debt, and gold, as well as securities within those asset classes. Such diversification helps the fund stabilise its performance and do well in different market conditions, especially during volatile and uncertain phases.

From its performance data, Axis Triple Advantage Fund has delivered promising returns across various time frames and has turned out to be a rewarding proposition for long-term investors having a moderate risk appetite. Even though the fund has trailed the category average particularly during bull market phases, it has done well during bear market phases and rewarded investors over complete market cycles. Moreover, the fund has managed to achieve this at a reasonable level of risk compared to its peers, thereby generating superior risk-adjusted returns.

Axis Triple Advantage Fund is suitable for investors with moderate risk profile looking for capital appreciation through diversification across asset classes.

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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