ShreyashDevalkar

Able new competitor in aggressive hybrids category

Shreyash Devalkar

Fund Manager

Axis Equity Hybrid Fund

The new Axis Equity Hybrid fund is positioned as an aggressive hybrid fund which will use a balanced approach to investing in equity and debt instruments. The fund intends to provide capital appreciation akin to equity but with a risk lower than that of equity. The fund manager indicates that the markets are likely to remain volatile over the next few months and these intermediate corrections will be used as opportunities to invest. On the debt side, the fund will use dynamic duration management based on interest rate cues to achieve optimal returns. With this NFO, Axis – one of the early adopters and champions of the hybrids space – completes its hybrids portfolio.

WF: In what way will the new Axis Equity Hybrid Fund differ from your other hybrids including Axis Equity Saver Fund, Dynamic Equity Fund and Triple Advantage Fund?

Shreyash: The new SEBI categorization norms has simplified the product positioning considerably. Axis is now present in all the categories of hybrid schemes with a clear demarcation among them.

The new fund on offer, Axis Equity Hybrid Fund will follow a balanced investing approach with primary investment in equity and related instruments (65-80%) while rest in debt instruments. This is suitable for investors looking for capital appreciation akin to equity but with a risk that is lower than that of equity.

Axis Triple Advantage Fund is a multi-asset product investing in equity, debt and gold and is suitable for investors looking for diversification across asset classes.

Axis Equity Saver Fund typically intends to run lower net equity than Axis Equity Hybrid Fund and takes arbitrage exposure in its portfolio to reduce risk even further. This fund is suitable for investors seeking moderate exposure in equity.

Axis Dynamic Equity Fund runs a dynamic approach using a proprietary model for target equity allocation (anywhere between 30-100%) based on market conditions.

WF: Will this be positioned from a category perspective as an Aggressive Hybrid Fund or a Balanced Advantage Fund? How will it differ from others in the category?

Shreyash: Axis Equity Hybrid Fund is being positioned as an aggressive hybrid fund. This has been one of the fastest growing categories within the MF industry as investors look at participating in the superior risk-adjusted returns along with alpha generated by fund managers in this category.

The key proposition for this fund is the approach to investing, the fund will follow the bottom-up investing philosophy where inclusion of stocks is based on their individual quality and merit. At Axis, we have followed this approach consistently across all equity portfolios.

This high-quality portfolio is likely to generate sustainable long-term performance at acceptable risk levels. The highly experienced fund management team at Axis is well placed to execute on this philosophy. The fixed income side within the portfolio of the fund, will be handled by an experienced and able investment team. Their approach is to follow the best ideas which suit the fund.

WF: How will asset allocation be decided between debt and equity? What will the initial allocation be when you cast the first portfolio?

Shreyash: The asset allocation in the fund is intended to be static with 65-80% in equity & equity related instruments while the remaining portion will be invested in debt and money market instruments.

WF: Within equity, what would be your strategy with respect to having the ideal market cap mix (large, mid, small)?

Shreyash: The fund’s mandate has not defined any market cap mix for the portfolio, the fund endeavors to build a portfolio with a large cap bias, the fund is likely to have upto 30% exposure towards midcap companies.

WF: You have nominated two fund managers for the fund – Shreyash Devalkar and Ashish Naik. How are their responsibilities with respect to the fund defined?

Shreyash: I (Shreyash Devalkar) am the Senior Fund Manager with expertise in managing large, mid and multi-cap strategies with around 17 years of industry experience. Ashish Naik – Fund manager, Equity, manages equity portion of hybrid strategies at Axis. He has been with Axis for 9 years now and brings in fresh perspective to portfolio management without drifting away from the investment mandate.

WF: What is the broad premise / strategy with respect to the debt proposition within this fund?

Shreyash: Debt portion of the fund (20-35%) will be dynamically managed across duration and the credit spectrum. The fund manager intends to follow an active debt strategy to generate absolute returns to capture opportunities across interest rate cycles by actively managing the duration and credit allocation of the fund's portfolio.

WF: What are the key challenges that you foresee in the next 1 year with respect to managing this fund and how do you propose to tackle it?

Shreyash: The markets have seen bouts of volatility over the past few months, it is expected that the volatility is likely to increase in the near future. Political and trade cues from across the globe have been weighing on markets. Equity market segments have seen correction where investor interest in mid and small caps has waned in last few months. However, we believe that corporate sector is at the cusp of a significant earnings recovery in the coming quarters and earnings growth is likely to stabilize post recent disruptions.

These running corrections are seen as an opportunity to invest. These are the times when investment philosophy of funds / fund houses gets tested. Axis Equity Hybrid fund, like all other equity funds managed by Axis fund house will scout for businesses with high growth potential. The fund will work with an essential large cap bias with upto 30% exposure in quality midcaps.

PRODUCT LABELS, RISKOMETER AND DISCLAIMERS:

AXIS EQUITY HYBRID FUND (An open ended hybrid scheme investing predominantly in equity and equity related instruments)

This product is suitable for investors who are seeking*:

Capital appreciation along with generation of income over medium to long term

Investment in equity and equity related instruments as well as debt and money market instruments

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*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

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Disclaimer

Past performance may or may not be sustained in the future. Sector(s) / Stock(s) / Issuer(s) mentioned above are for the purpose of disclosure of the portfolio of the Scheme(s) and should not be construed as recommendation. The fund manager(s) may or may not choose to hold the stock mentioned, from time to time. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s).
Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh).
Trustee: Axis Mutual Fund Trustee Ltd.
Investment Manager: Axis Asset Management Co. Ltd. (the AMC).
Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. This document represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

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