The Axis Long Term Equity Fund is an open-ended, highly diversified equity fund that has the objective to provide the investor with long-term capital appreciation and income. This fund invests primarily in mid-cap and large-cap companies with a sustainable business model and invests a small amount of the corpus in small-cap companies with strong growth potential and sustainable business models. This is a component of debt and other stable money market instruments in this fund to provide it with a certain level of stability during volatile market period.
Potential investors in this scheme will be able to buy units at Net Asset Value (NAV) -related prices on all business days. The redemption of units under this scheme will only be possible after a maturity period of 3-years from the date of allotment. The repurchase price of these units will be published on a daily basis and under normal circumstances redemption proceeds will be dispatched to the investor within 10 working days from the date of receipt of the redemption request.
The Axis Long Term Equity Fund is an equity-based mutual fund, and therefore, carries the risks associated with this category of funds. Equity mutual funds primarily invest the corpus in equity and are therefore exposed to market volatility. Investors in such schemes should understand that returns will not be guaranteed and the investment will have a mandatory lock-in period of 3-years, before which there is no possibility of redemption of units. As the fund is an equity-based mutual fund and is affected by market ups and downs, investors are encouraged to have a long investment horizon of a minimum of 5 years to see sizable returns on their investments and to avail the benefits of compounding returns.
The Axis Long Term Equity Fund qualifies as an Equity Linked Saving Scheme (ELSS) under Section 80C of the Income Tax Act, 1961. Investors in ELSSs can claim a deduction of up to Rs. 1.5 lakhs or the amount invested, whichever is lower, from their taxable income. At the time of redemption of units long-term capital gains tax will be applicable @ 10%, as prescribed under the Income Tax Act.
Since its inception in December 2009, the Axis Long Term Equity Fund has performed below its S&P BSE 200 benchmark only once, in 2016. The fund’s performance peaked between 2013 and 2015 allowing it to outperform the benchmark by a large margin. In 2015, as the rest of the market struggled the Axis Long Term Equity Fund was still able to provide positive returns to its investors. Over the past two years, the fund’s alpha also known as active returns has diminished, but it is too soon to judge its performance.
The Axis Long Term Equity Fund is one of the most consistently, high performing funds in the market today. The fund has a displayed a high alpha by and low beta when compared to its peers. A low beta makes this a comparatively low-risk equity mutual fund, but with equity mutual funds, as they are exposed to market fluctuations, there is a good chance of spikes in beta which can cause a dramatic drop in returns.