Axis Quant Fund is managed very differently compared toother Axis equity funds. This fund employs a 3 factor model to pick stocks from its 300+ stock universe that rank high on its composite scores table. The factors include quality, growth and value/valuation, with quality and growth getting higher weights than value in arriving at composite scores for each stock, as Axis believes India is much more of a growth market than a value market.
A separate algo drives portfolio construction by picking stocks with high composite scores and assessing their risk-adjusted return profile to create a portfolio that is optimal in terms of expected risk adjusted returns. Stock level constraints are also imposed to ensure portfolio liquidity and sector level constraints are imposed from an overall risk perspective.
With an overlap of only 20-25% with other Axis equity funds, this fund stands out from the Axis equity suite in terms of style and portfolio composition. With a beta of less than 0.9, the fund scores well on risk parameters. On risk-adjusted returns, the fund is not only in top quartile in the quant funds space, but also in the broader flexicap funds space.
The portfolio has a 70% active share – denoting fairly high deviation from benchmark, which makes it an interesting alpha seeking portfolio. Banks (led by ICICI Bank with a 9%+ weight in portfolio) score high on quality, growth and valuation and therefore find sector-neutral weight vs benchmark, despite the high overall active share.
The fund is overweight utilities, autos and industrials/capital goods. Fund is underweight IT due to growth concerns and materials/commodities.