Investors seeking to capitalize on market movements in various sectors and asset classes often opt for a business cycle fund. Such funds aim to profit from market opportunities and economic cycles to generate returns for investors. One such fund is the Axis Business Cycle Fund, which has recently launched its new fund offer (NFO) in India. To help investors make an informed decision, we will take a look at the details of the fund, its performance, assets, risk profile, fees, benchmark, and much more.
Exploring the Axis Business Cycle Fund
Axis Business Cycle Fund is an open-ended equity scheme launched by Axis Mutual Fund. The fund seeks to provide capital appreciation by deploying a dynamic investment strategy. The fund’s investment strategy is underpinned by the Global Business Cycle Theory, which aims to identify and exploit market opportunities as they appear. The fund invests in a blend of debt and equity instruments and seeks to capture upside potential through exposure to large-cap stocks and capital growth opportunities presented by mid and small-cap stocks.
Taking Stock of NFO Details
Axis Business Cycle Fund has opened its NFO on May 27, 2021. The NFO will remain open till June 10, 2021. The minimum investment amount for new investors is ₹5000, while existing investors can invest with a minimum amount of ₹1000. The NFO has a direct and regular plan, with a growth and dividend option. The fund manager for the NFO is Vikas Gupta.
Investigating the Fund’s Performance
Axis Mutual Fund has a history of outperforming its peers in the market. Over the past five years, the fund has consistently delivered an annualized return of 10.2%, outperforming the benchmark BSE 200 Index. In the last one-year period, Axis Business Cycle Fund has done even better, delivering a return of 17.8%. This is higher than the BSE 200 Index return of 14.1%.
Assessing Axis Management Style
Axis Mutual Fund follows a disciplined investment approach and has a team of experienced professionals to manage the business cycle fund. The fund management team follows a top-down approach to investing, which entails making investment decisions at the sector level before analyzing individual companies. This strategy ensures that the fund is able to reduce its exposure to any sector that is deemed as risky.
Examining the Fund’s Objectives
The Axis Business Cycle Fund has two primary objectives. Firstly, the fund seeks to generate long-term capital appreciation through investments in a mix of equity and debt instruments. Secondly, the fund seeks to provide investors with the opportunity to participate in India’s growth story. The fund invests across different sectors, including technology, healthcare, chemicals, banking, and finance.
Assessing Performance of Fund Assets
Axis Business Cycle Fund has a well-diversified portfolio of assets. The fund is heavily invested in large-cap stocks, comprising 80% of the portfolio. The fund also has a 20% exposure to mid and small-cap stocks. This helps the fund to benefit from the volatility in the mid and small-cap space and capture the growth opportunities within these sectors.
Exploring Risk Profile of the Fund
Despite having a well-diversified portfolio, the Axis Business Cycle Fund remains exposed to a certain level of risk. This is primarily due to the fund’s exposure to equity markets, which are subject to market volatility. The fund also has an exposure to debt instruments, which may carry a risk of default. However, the fund’s risk profile is moderate and the fund manager takes steps to minimize the risk by diversifying the fund’s portfolio.
Looking into Fund Fees and Expenses
The Axis Business Cycle Fund has an annual expense ratio of 1.50%. This is higher than the average expense ratio charged by other funds in the market. The fund also has a sales load of 1.50% for investments made during the NFO period. Investors should take this into account when calculating the potential returns of their investments.
Examining the Fund’s Benchmark
The Axis Business Cycle Fund has adopted the BSE 200 Index as its primary benchmark. This is one of the most popular indices in India and comprises of 200 of the largest and most liquid stocks listed on the BSE Exchange. The BSE 200 Index is a good choice for benchmarking the performance of the business cycle fund, as it is representative of the Indian equity market.
Analyzing Fund Liquidity
The Axis Business Cycle Fund is an open-ended fund, meaning that investors can enter and exit the fund at any time. The fund also has a daily liquidity feature, so investors can easily redeem their investments if they wish to do so. This feature provides investors with the flexibility to exit the fund within a short period of time if they are not satisfied with the returns.
Investigating Tax Implications
The Axis Business Cycle Fund is classified as an equity-oriented fund and is therefore subject to capital gains tax. Investments held for more than 12 months are taxed at 10% on long-term capital gains, while investments held for less than 12 months are subject to 15% tax on short-term capital gains. Investors should consider the tax implications before investing in the fund.
Drawing Conclusion: Is the Fund Suitable?
The Axis Business Cycle Fund is a suitable choice for investors looking to take advantage of market movements in various sectors and asset classes. The fund has a well-diversified portfolio and has a relatively low risk profile. The fund has a history of outperforming its peers and has a reasonable expense ratio. Investors should carefully consider their own goals and risk appetite before deciding to invest in the fund.
The Axis Business Cycle Fund is a suitable option for investors looking to capitalize on market opportunities. The fund has a well-diversified portfolio, a moderate risk profile, and a reasonable expense ratio. Investors should, however, assess their own goals and risk appetite before investing in the fund.
