About the Mutual Fund
- Fund Name: Axis Small Cap Fund Direct Growth
- Fund Type: Equity Small Cap
- Fund Manager Background: Shreyash Devalkar, along with Mayank Hyanki and Krishnaa N, spearheads the Axis Small Cap Fund. Devalkar, with over 5 years of experience and managing 26 funds, showcases a strong background in equity and small cap investments.
Holding Analysis or Portfolio Breakdown
The fund’s portfolio is diversified across 103 holdings, focusing on growth-oriented small-cap stocks. Top 15 stock holdings with their percentages include:
- Clearing Corporation Of India Ltd. – 9.09%
- Birlasoft Ltd. – 3.99%
- Narayana Hrudayalaya Ltd. – 3.87%
- Brigade Enterprises Ltd. – 3.76%
- Blue Star Ltd. – 3.30%
- Cholamandalam Financial Holdings Ltd. – 2.86%
- Krishna Institute of Medical Sciences Ltd – 2.80%
- Ahluwalia Contracts (India) Ltd. – 2.38%
- CCL Products (India) Ltd. – 2.30%
- Can Fin Homes Ltd. – 2.07%
Plus 5 more leading small-cap stocks shaping the core of this growth-oriented portfolio.
Returns and Rankings in Their Category
- 3 Month Return: -1.83%
- 6 Month Return: 6.61%
- 1 Year Return: 35.91%
- 3 Year Annualized Return: 24.43%
- 5 Year Annualized Return: 24.69%
- Return since Inception: 22.82% The fund ranks well in its category, showing competitive returns, especially over longer-term horizons.
How Old Is the Fund
Axis Small Cap Fund Direct Growth was launched on November 29, 2013, making it nearly a decade old. This tenure allows it to demonstrate a robust track record of navigating through various market cycles, especially in the volatile small-cap segment.
Pros:
- Low Expense Ratio of 0.53%, increasing net returns for investors.
- Strong performance history with significant long-term returns.
- Experienced management team with a proven track record.
Cons:
- Very High Risk associated with small-cap investments.
- The exit load of 1% for redemptions within 12 months for investments beyond 10% could deter short-term investors.
Investor Suitability: This fund is suitable for investors seeking high growth potential and who have a high-risk tolerance and a long-term investment horizon. The focus on small-cap companies means investors can benefit from the fund’s ability to spot and invest in potential high-growth businesses before they become well-known among larger investor bases.
TLDR: Axis Small Cap Fund Direct Growth
Axis Small Cap Fund Direct Growth is designed for investors with a very high risk tolerance, focusing on small-cap equities. Here’s a quick breakdown:
- Current NAV: ₹94.13 as of 19 Mar 2024.
- Turnover Ratio: 10%, indicating moderate trading activity. Suitable for both long-term and medium-term investors who can tolerate high risk.
- Returns: -1.83% (3M), 6.61% (6M), 35.91% (1Y), 24.43% (3Y), and 24.69% (5Y), showing strong performance in the longer term.
- Expense Ratio: 0.53%, lower than the category average, enhancing net returns for investors.
- Advanced Ratios: A Sharpe Ratio of 2.84 suggests high risk-adjusted returns compared to peers. The fund ranks well within its category, showing competitive returns, especially over longer-term horizons.
- Peer Comparison: Stands out for its low expense ratio and solid 5-year performance, although its short-term performance is somewhat behind the category average.
Investor Suitability:
- High-Risk Investors: Ideal, given its small-cap focus and potential for high returns.
- Medium-Risk Investors: May consider with caution due to volatility.
- Low-Risk Investors: Not suitable due to the very high-risk profile.
- Time Horizon: Best suited for long-term investments (more than 5 years) due to the inherent volatility of small-cap stocks.
Analysis:
- Axis Small Cap Fund Direct Growth shines in long-term growth potential with an impressive track record in 5-year returns. Its low expense ratio and moderate turnover ratio make it a cost-efficient choice for long-term investors.
- The fund’s management, led by Shreyash Devalkar, has effectively navigated the small-cap space, as evidenced by its above-average returns in the longer term.
- While its short-term performance may lag behind some peers, the fund’s long-term capital appreciation focus aligns well with investors seeking growth from small-cap investments.
- The fund’s healthy AUM of ₹19,606.42Cr as of 20 Mar 2024 reflects investor confidence and provides ample liquidity.
Axis Small Cap Fund Direct Growth is best for investors seeking significant growth potential in the small-cap sector, with the patience to withstand short-term volatility for long-term gains.
Analysis of Axis Small Cap Fund Direct Growth
Current NAV
- NAV (Net Asset Value): ₹94.13 as of 19 Mar 2024. It reflects the fund’s per unit market value, determining the price at which units are bought or sold.
Turnover Ratio
- Turnover Ratio: 10%. This ratio shows how frequently the fund’s holdings are changed in a year. A 10% turnover ratio indicates low trading activity, suggesting a long-term investment strategy. It’s healthy for both long-term and short-term investing, indicating stability and a focused investment approach.
Returns in Last 1,3,5 Years
- 1-Year Returns: 35.91%. Indicates strong performance over the past year.
- 3-Year Returns: 24.43%. Shows consistent growth over a medium-term horizon.
- 5-Year Returns: 24.69%. Reflects solid long-term performance, beneficial for long-term investors.
Key Metrics
- Expense Ratio: 0.53%. This low ratio indicates cost efficiency, ensuring more of the investor’s money is invested rather than spent on managing the fund.
- PE Ratio: Not directly provided, but a lower PE (Price to Earnings) ratio could indicate the fund is investing in undervalued stocks or sectors with growth potential.
- Sharpe Ratio: 2.84. A high Sharpe ratio suggests the fund has provided good risk-adjusted returns, meaning the returns have compensated well for the risk taken.
- Cat Exp Ratio (Category Expense Ratio): 1.24%. Compared to the fund’s lower expense ratio, this suggests Axis Small Cap Fund is more cost-efficient than the average fund in its category.
- Cat PE Ratio (Category Average PE Ratio): 43.94. The fund’s investments might be more conservatively valued compared to the broader category, potentially indicating a focus on value or stable investments.
- Cat Sharpe Ratio (Category Average Sharpe Ratio): 2.65. The fund’s Sharpe ratio being higher than the category average indicates better risk-adjusted performance compared to peers.
Peer Comparison
- Axis Small Cap Fund stands out for its lower expense ratio and strong performance across 1, 3, and 5 years when compared to its peers. This indicates effective fund management and an ability to navigate the small-cap space successfully.
Conclusion: The Axis Small Cap Fund Direct Growth exhibits a solid track record of performance across various time frames, with an exceptionally low expense ratio contributing to its attractiveness. Its moderate turnover ratio aligns with a strategic approach to long-term capital appreciation. The fund’s high Sharpe ratio further highlights its efficiency in managing risk relative to returns. This fund appears well-suited for investors looking for growth in the small-cap sector, willing to accept high risk for potentially high returns over a longer investment horizon.
Analysis of Axis Small Cap Fund Direct Growth
Top Holdings Company
The top holdings in the Axis Small Cap Fund Direct Growth portfolio include:
- Clearing Corporation Of India Ltd. – 9.09%
- Birlasoft Ltd. – 3.99%
- Narayana Hrudayalaya Ltd. – 3.87%
- Brigade Enterprises Ltd. – 3.76%
- Blue Star Ltd. – 3.30%
- Cholamandalam Financial Holdings Ltd. – 2.86%
- Krishna Institute of Medical Sciences Ltd – 2.80%
- Ahluwalia Contracts (India) Ltd. – 2.38%
- CCL Products (India) Ltd. – 2.30%
- Can Fin Homes Ltd. – 2.07%
This diversified portfolio across sectors suggests a strategic approach to small-cap investing, focusing on companies with potential for high growth.
Advanced Ratios
- Standard Deviation (Std Dev): 10.44%, indicating the fund’s volatility or risk level compared to its average returns.
- Beta: 0.60, shows the fund’s sensitivity to market movements. A beta less than 1 indicates lower volatility compared to the market.
- Sharpe Ratio: 2.83, a measure of risk-adjusted return. Higher values indicate better returns for the risk taken.
- Sortino Ratio: 4.29, similar to Sharpe but only considers downside volatility, suggesting the fund’s efficient negative risk management.
- Alpha: 16.35, measures the fund’s performance relative to a benchmark. Positive alpha indicates outperformance.
Peer Comparison
- Axis Small Cap Fund stands out with a lower expense ratio (0.53%) compared to its peers, indicating cost-efficient management.
- It has shown robust returns across 1, 3, and 5 years compared to the category average, albeit slightly lower than some top-performing peers like the Quant Small Cap Fund.
Fund House and Investment Objective
- Fund House: Axis Asset Management Company Ltd., part of Axis Bank, is known for its robust risk management and diverse product offerings.
- Investment Objective: The Axis Small Cap Fund Direct Growth aims to generate long-term capital appreciation by investing predominantly in equity and equity-related instruments of small-cap companies. The objective is well-supported by the fund’s strategic holdings and performance metrics, indicating its potential to capitalize on the growth opportunities in the small-cap segment.
In conclusion, the Axis Small Cap Fund Direct Growth presents a compelling option for investors looking for exposure to the small-cap sector, offering a balanced mix of risk management and growth potential, backed by a reputable fund house.
Is It Following Any Indices or Benchmark?
Yes, the Axis Small Cap Fund Direct Growth benchmarks against the Nifty Smallcap 250 – TRI. This index represents the segment of companies ranking 251st onwards in terms of full market capitalization, aligning with the fund’s focus on small-cap equity investments.
Risk Profile of This Mutual Fund
The Axis Small Cap Fund Direct Growth is categorized under Very High Risk. This classification is due to its concentration on small-cap companies, which typically exhibit higher volatility and risk compared to large-cap or even mid-cap companies. The potential for higher returns comes with an increased level of risk, making it suitable for investors with a high-risk tolerance and a long-term investment horizon.
Market Cap Weightage
Given its classification as a Small Cap fund, the majority of its investments are in small-cap companies. The fund’s portfolio showcases a significant allocation towards small-cap stocks, aligning with its investment objective to generate long-term capital appreciation by tapping into the growth potential of these companies. The exact breakdown of investments into large-cap, mid-cap, and small-cap companies isn’t explicitly detailed, but the nature of the fund suggests a predominant exposure to small-cap entities.
For Whom This Mutual Fund Is Suitable – Investor Profile
This fund is most suitable for:
- Investors with a High-Risk Tolerance: Given its very high-risk classification, it’s tailored for investors who can stomach significant market volatility and are looking for high growth potential.
- Long-term Investors: Those who have a long-term investment horizon, ideally more than 5 years, allowing the volatility of small-cap stocks to smooth out over time and potentially realize substantial capital appreciation.
- Investors Seeking Diversification: Individuals looking to diversify their investment portfolio by including small-cap stocks, which may offer unique growth opportunities not found in large-cap stocks.
- Knowledgeable Investors: It’s best suited for investors who understand the inherent risks and dynamics of the small-cap market segment.
The Axis Small Cap Fund Direct Growth is a high-risk, potentially high-reward investment option that aligns with the investment goals of investors looking for significant growth through exposure to the small-cap segment of the market. Its performance and strategic focus on small-cap companies make it an attractive proposition for the right investor profile, despite the inherent risks associated with this market segment.
Risk Profile Analysis
The Axis Small Cap Fund Direct Growth is classified under the “Very High Risk” category. This categorization is indicative of the potential volatility and risk associated with investing primarily in small-cap stocks. Small-cap companies, by nature, offer high growth potential but are more susceptible to market fluctuations and liquidity concerns compared to their large-cap counterparts. This fund is suitable for investors who are seeking aggressive growth and have a high tolerance for risk, as well as a long-term investment horizon to weather potential market volatility.
Scheme Information
- Type: Equity Small Cap
- Launch Date: 29 Nov 2013
- Asset Under Management (AUM): ₹19,606.42 Crores (as of 20 Mar 2024)
- NAV: ₹94.13 (as of 19 Mar 2024)
- Expense Ratio: 0.53% (Direct Plan)
- Average Annual Returns: 36.09% since inception
- Benchmark: Nifty Smallcap 250 – TRI
- Exit Load: 1% for redemptions beyond 10% of the investment within 12 months
- Tax Implications: Short-term capital gains taxed at 15% if redeemed before one year; long-term capital gains over ₹1 lakh are taxed at 10%.
AMC Profile and AUM in Details
Axis Asset Management Company Ltd. operates as the investment manager for the Axis Small Cap Fund Direct Growth. It is part of Axis Bank, one of India’s largest private sector banks. With a robust track record and a reputation for transparency and ethical management, Axis AMC has established itself as a key player in the Indian mutual fund industry.
Total AUM of AMC: ₹2,67,558.99 Crores
Number of Schemes Offered: 63 across various asset classes and investment strategies, catering to a wide range of investor needs and risk appetites.
Contact Information:
- Phone: 022-43255161
- Email: customerservice@axismf.com
- Website: https://www.axismf.com
- Registrar & Transfer Agent: KFin Technologies Limited
Pros and Cons Based on Given Data
Pros:
- Low Expense Ratio: At 0.53%, it is competitive, allowing more of the investors’ money to stay invested.
- Strong Performance: With an average annual return of 36.09% since inception, it has demonstrated the capability to deliver substantial returns.
- Reputable AMC: Axis AMC’s reputation and robust management practices provide a level of trust and reliability.
Cons:
- High Risk: Being a small-cap fund, it carries a very high risk, making it unsuitable for conservative investors.
- Market Volatility: Small-cap stocks are more vulnerable to market fluctuations, which can lead to significant short-term volatility.
The Axis Small Cap Fund Direct Growth is an attractive option for investors with a high-risk tolerance, seeking substantial growth through small-cap equities. Its performance, low expense ratio, and the reputation of Axis AMC make it a noteworthy choice for suitable investors, despite the inherent risks associated with small-cap investing.