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Axis Equity Hybrid Fund helps you to maximize wealth by taking exposure to equities and debt instruments. This article covers the following:
Axis Mutual Fund house has recently launched a New Fund Offer (NFO) named as Axis Equity Hybrid Fund. It is an open-ended hybrid scheme which aims to generate long-term capital appreciation along with income over medium to long-term horizon. The fund manager will invest in equity and equity-related securities along with debt and money market instruments. Equity helps to ride the growth wave and enhances the potential to earn higher returns. Fixed income/debt provides stability to the portfolio by being less volatile and generating income regularly. The investment strategy is dependent on the current market outlook and may change at the option of the fund manager. The scheme doesn’t assure or guarantee the achievement of investment objective of the fund. The scheme is available as a direct plan as well as a regular plan of the mutual fund. Additionally, both the variants are available in growth option and dividend option. The New Fund Offer (NFO) period is from 20th July 2018 and continues till 3rd August 2018.
As an investor, it is very important to know the asset allocation strategy of the scheme. It basically explains in which securities your money will be invested and in what proportion. The scheme invests 65-80% in equities and 20-35% in debt. The fund manager will use a multi-cap bottom-up strategy for picking stocks related to fast-growing sectors. It will be predominantly inclined to large-cap stocks with up to 30% investment in mid-cap stocks. As regards the debt component, the fund will follow a tactical approach across sovereign bonds and corporate bonds. The portfolio duration and credit exposures will be determined after doing a thorough research. Following an active duration management, the fund attempts to invest in the entire range of debt instruments across credit/duration spectrum.
The minimum application amount to purchase the units of the scheme has been fixed at Rs. 5,000/- and in multiples of Re. 1/- thereafter. The minimum additional purchase amount is fixed at Rs.100 and in multiples of Re. 1/- thereafter. The scheme charges an exit load of 1% if you redeem/switch investments on or before 12 months from the date of allotment. This load will be charged on over and above the 10% of the investment. There are no exit loads if redemption/switching takes place after 12 months from the date of allotment. The scheme considers CRISIL Hybrid 35+65 – Aggressive Index as the benchmark to compare the performance of the fund. The fund managers of the scheme are Shreyash Devalkar & Ashish Naik (Equity) and R Sivakumar (Debt) respectively.
As an investor, you need to be aware of the risks involved in investing in this scheme. The scheme might be exposed to the following risks:
Being a hybrid scheme, it would give you the best of both worlds. Apart from higher risk-adjusted returns, the scheme offers the following benefits:
This happens to be the key ingredient of successful investing. By having a balanced asset allocation, the scheme provides confidence to the investor through the ups and downs of the market. You would benefit from active management to earn higher returns as compared to investing in pure debt funds.
The correlation between asset classes in a portfolio influences the quantum of returns earned. You need to know that all asset class does not move in the same direction at all times. A higher correlation would increase the portfolio sensitivity to market movements and make it riskier. Conversely, a lower correlation among assets enhances gains on account of diversification. It functions like a hedge during market ups and downs and optimizes return.
The fund manager will re-balance the portfolio periodically to diminish the tendency of portfolio risk crossing the acceptable limit. This would involve bringing them out of proportion asset classes back to target asset allocation. This reduces the overall risk and keeps fund returns in line with expectations.
Usually the more the returns fall, the larger is the increase required in returns to recover portfolio losses. Apart from delivering higher risk-adjusted returns, the fund provides downside protection as well. The objective, in this, is to reduce the frequency and magnitude of capital losses which might result from significant market downturns.
The fund manager adds value to the portfolio through active management within the asset class. Research-based investing with fundamental approach contributes to alpha generation in an overall portfolio.
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