I have been an investor in the Axis Bluechip Fund for over two years. It’s underperforming and hasn’t recovered since the market hit an all-time high. Axis Mutual Funds has been one of the best performers in years but hasn’t picked up momentum since the fraud hit, so could fraud be to blame?
Most of Axis Mutual’s funds are managed with a growth-oriented approach of acquiring fast-growing companies. From 2017 to 2020, when growth was prevalent, the fund consistently performed best within its category.
After Covid, the growth style of investing fell out of favor and value investing came back strong. As a result, the fund delivered a somewhat underwhelming performance in his 2021.
For the third year in a row (2018, 2019 and 2020), value investing underperformed in the Indian equity market, while growth investing styles delivered substantial returns.
Growth stocks are stocks of companies with high growth potential in terms of both earnings and returns to investors.
Value stocks, on the other hand, are stocks of companies that trade at a lower price relative to the company’s performance.The difference is explained here
Video on why Axis Mutual Funds performed better
In this in-depth video from December 2020, ETMONEY’s Shankar Nath examines the reasons for the top performance of Axis Mutual Funds, delves deeper into the portfolio composition of Axis Long Term Equity Funds, and provides powerful insight into fund managers’ investment styles. offers. Flip now!
Below are the strategies that the AXIS MF fund management team appears to be using.
- Avoid public sector businesses. Note: PSU stock he did well in 2022.
- A concentrated set of 30 strains. Stocks for 2020 are: Over the past two years, most stocks have not performed well.
- Conviction bets on select small businesses
- Revenue growth (at least 10% at 5-year CAGR)
- EBITDA growth (at least 10% over 5 years CAGR)
- EPS growth (at least 10% at 5-year CAGR)
- High net profit margin (13+% for large companies)
- positive free cash flow
- Return on Equity (15+%)
- Return on Capital Employed (20+%)
Value investment and growth investment
In the Indian equity market, value investing has underperformed for three consecutive years (2018, 2019, 2020) before a resurgence in 2021, while growth investing styles have delivered substantial returns.
Growth stocks are stocks of companies with high growth potential in terms of both earnings and returns to investors.
Value stocks, on the other hand, are stocks of companies that trade at a lower price relative to the company’s financial performance. Value investors are looking for hidden gems in the market: stocks with low prices and promising prospects. These stocks are undervalued for a variety of reasons, from short-term events like the public relations crisis to longer-term phenomena like recessions within the industry. Benjamin Graham is known as the father of value investing and his 1949 book The Intelligent Investor: The Definitive Book on Value Investing is still popular today. One of Graham’s protégés is the most famous investor of our time, Warren his Buffett.
Both have their strengths and weaknesses and perform differently depending on where the economy is in the business cycle.
Dividend yields are generally high. |
Low (or no) dividend yield. |
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It may not be rated as well as expected. |
Relatively high volatility. |
No particular investment style will work consistently over time. In addition to this, there may be prolonged cycles in which any of these investment styles underperform.
Therefore, investors are advised to choose a balanced portfolio that combines these two styles (the aptly named “blended” style of investing) for consistent portfolio performance.
Axis mutual fund scam
SEBI is investigating allegations of frontrunning by some former employees of Axis MF.
Axis MF has issued a memo indicating that it has appointed an external investigator to investigate the allegations of wrongdoing. It added that two senior executives, Viresh Joshi, the fund house’s chief trader and fund manager, and Deepak Agarwal, an equity research analyst and fund manager, have been suspended.
Fund front-running is similar to insider trading in publicly traded companies. Here, fund managers, traders, or dealers are aware of large buy and sell orders by institutions and use that information for personal gain. The fund is affected as the price may rise before executing the buy order. This affects investors by affecting net asset value.
Should I continue to invest in Axis Mutual Funds?
No particular investment style will work consistently over time. There is also the potential for prolonged cycles of underperformance in any of these investment styles. Axis Mutual Funds’ investment style doesn’t work.
don’t go to redemption
You can stop further with the Axis Mutual Fund. Wait for its performance to improve.
Fund performance comes and goes. The cost stays forever.
An alternative to Axis Mutual Fund?
“The mutual fund industry is riddled with exaggerations, misinformation, and a plethora of frivolous information. It’s an industry that embraced the gimmick and rejected the substance of the investment. ”
As John C. Bogle said in TCommon Sense Investing Booklet: The Only Way to Guarantee Your Fair Share of Stock Market Returns
All investments are common sense. Owning a diversified stock portfolio and holding it for the long term is a winner’s game. Trying to beat the stock market is theoretically a zero-sum game (every winner has a loser), but when the real cost of investing is subtracted, it becomes a loser’s game. . It is common knowledge and history proves that the simplest and most efficient investment strategy is to buy and hold all publicly traded companies in the country at very low cost. A classic index fund that owns this market portfolio is the only investment that guarantees a fair share of stock market returns.
book details The Common Sense Investing Booklet by John Bogle here
- Fund returns are different (much lower) than investor returns.
- Money flows into the fund when performance is good, and flows out of the fund when performance is poor.
- Do not select winning funds based on past performance.
- Yesterday’s winner, tomorrow’s loser.
- Buying a fund based purely on past performance is one of the stupidest things an investor can do.
- Equity funds lag the market because of costs. Fund investors receive less than half of the fund’s return on equity. why? Unproductive market timing and unfavorable funding choices.
Hence John Bogle suggests!
Emotions don’t have to enter the equation. Own the entire stock market and do nothing. Remember to do nothing.
From our article The Best Mutual Funds of 2023
Why is Axis Mutual Fund not performing? What is Axis Mutual Fund Scam? Should I continue to invest in Axis Mutual Funds?