Axis Long-Term Equity: A six-year-old, with a consistent record

Haven’t made tax saving investments for the current fiscal yet? You can consider Axis Long Term Equity, an ELSS fund. Though it has a track record of just six years, it has consistently topped the return charts. Over the last four years, the scheme’s rolling one-year return has been higher than its benchmark 99 per cent of the time.

The fund has not only bettered its benchmark BSE 200 Index across all time periods but has also raced ahead of peers such as Franklin India Tax Shield, HDFC Tax Saver and ICICI Prudential Long Term Equity (formerly ICICI Pru Tax Plan). Its one, three and five-year returns have been higher than of BSE 200 Index by over 14 percentage points.

Given the three-year lock-in for investments made in ELSS schemes, lumpsum investment may be preferred over the systematic route. However, if you expect the market to remain volatile for a while now, the investment can be staggered over a period of time.

Contains downsides well

In the past, the fund has been able to contain the fall in its NAV during corrective phases better than its benchmark. This is despite the fund taking a fair bit of exposure to stocks in the small and mid-cap space. For instance, in the last one year, even as bellwether indices posted flattish to negative returns, the fund managed to deliver healthy double-digit returns. This was made possible by adept sector rotation by the fund manager, Jinesh Gopani, who has been managing the fund since its inception in December 2009.

The fund’s strategy to increase exposure to export-heavy themes such as IT, pharma and auto ancillaries, in the light of the depreciation of the rupee against the US dollar, provided a leg-up to its performance. The fund also reduced exposure to cyclical themes, such as financials, which aided performance.

Besides timely sector churns, the fund’s bets in the mid-cap space, such as Page Industries, WABCO India and PI Industries spiced up its returns. Now, about 70 per cent of the scheme’s assets are in large-caps and the rest in mid and small-cap stocks.

Historically, the fund has not only weathered volatility better than its benchmark but has also delivered superior returns during rallies. For instance, during the August 2013-March 2015 period, the fund’s NAV jumped by about 140 per cent even as the BSE 200 Index rose by about 75 per cent. Over the last six months, the fund has increased exposure to companies in the pharma, IT and logistics space.