Axis Multi Cap Fund: One of the best performing multi cap funds

Axis Multi-cap Fund completed 3 years in November 2020. 3 year performance period is usually a good horizon to evaluate the performance of a fund. Multi-cap funds invest across different market cap segments i.e. large cap, midcap and small cap.

Axis Multi-cap fund is one of the best performers in its category (please see Top Performing Multi-cap Fund in last 3 years). The chart below shows the growth of Rs 10,000 in the scheme since its inception. You can see that the scheme was able to outperform its Benchmark Index, Nifty 500 TRI. The CAGR returns of the fund since inception was 13.2% (as 27^th January 2021).

Source: Advisorkhoj Research Disclaimer: Past performance may or may not be sustained in the future

The table below shows the performance of Axis Multi-cap Fund versus its benchmark (Nifty 500 TRI), multi-cap funds category and Nifty 50 TRI over various trailing periods. You can see that the scheme was able to outperform both its benchmark and category average returns over sufficiently long investment tenures.

Source: Advisorkhoj Research Disclaimer: Past performance may or may not be sustained in the future

Rolling Returns

The chart below shows the 1 year rolling returns of the scheme since the scheme inception (20^th November 2017). We saw different market conditions in the last 3 years or so. The mid 2018 to mid 2020 saw bear market conditions in mid and small cap market segments, with severe correction in small caps. We saw a pre-election rally in the run up to 2019 Lok Sabha elections and continuation of the rally after the polls confirmed a clear NDA majority in Parliament.

The financial markets were rocked by the outbreak of COVID-19 pandemic in February and March of 2020, with the Nifty crashing 23% in March 2020. After that we saw a recovery, which became stronger in the coming months as the economy was gradually re-opened after a stringent lockdown. By the final quarter of calendar year 2020, Nifty was trading at its all-time high and the momentum in the stock market has been sustained. Midcaps and small caps have also recovered from the bottoms.

Source: Advisorkhoj Rolling Returns Calculator Disclaimer: Past performance may or may not be sustained in the future

The chart above shows that Axis Multi-cap Fund was able to consistently outperform the benchmark in different market conditions and generate alphas for investors. You can see in the chart above that the fund manager was able to downside volatility of scheme relative to the index. Percentage of negative 1 year return instances of the scheme since inception was 16% versus 37% for the benchmark since the inception of the scheme. Percentage of 12%+ 1 year return instances of the scheme since inception was 31% versus just 11% for the benchmark since the inception of the scheme. This is the hallmark of a good fund manager – a good fund manager should be able to outperform the market across different conditions over long investment tenures.

SIP Returns

The chart below shows the returns of Rs 10,000 monthly SIP in that Axis Multi-cap Fund since inception. You can see in the chart below that you could have accumulated a corpus of Rs 508,600 with a cumulative investment of just Rs 390,000. The annualized SIP returns (XIRR) of the scheme since inception is 17.3%.

Source: Advisorkhoj Research Disclaimer: Past performance may or may not be sustained in the future

About Axis Multi-cap Fund

The scheme was launched in November 2017 and has Rs 7,451 Crores of assets under management (AUM) as on 31^st December 2020. The expense ratio of the scheme is 1.93%, as on 31^st December 2020. Axis Multicap Fund seeks to invest across the market cap spectrum in high conviction ideas with improved risk adjusted return characteristics. The fund manager looks for stocks that are expected to report faster growth relative to the benchmark.

The fund as such is sector agnostic and focuses on a bottom up approach to invest in stocks that are at an inflection point such as market share gain, industry consolidation, sunrise industries, improved management focus and capital allocation or regulatory & policy changes. Currently (as on 31^st December 2020), the top 5 sectors of the scheme are Banking and Financial Services, Consumer goods, Agro Inputs and Chemicals, Information Technology and Healthcare.

Source: Axis MF

Stock Selection Strategy

• High conviction ideas with improved risk - adjusted return characteristics


• Look for stocks that are expected to report faster growth relative to the benchmark


• Aims to look for stocks that are at inflection point


• Invests across market cap spectrum. Typically 50-100% in large cap & 0-50% in mid & small cap stocks.

Conclusion

Axis Multi-cap Fund is a diversified equity fund that invests in companies across market capitalisation. This multi-cap mutual fund aims to offer investors an ideal mix of equities in an attempt to provide long term returns while minimizing risks associated with market volatility. It constantly endeavours to invest in quality companies with high growth prospects with an aim to deliver risk adjusted returns for investors. Investing in a multi-cap fund is less risky as compared to a pure mid cap or a small cap fund as the fund manager has the leeway to capture best available opportunities in the market at that time. Investors should have very high risk appetite and long investment tenures (at least 5 years recommended) for investing in Axis Multi-cap Fund. Investors should consult with their financial advisors, if this scheme is suitable for their investment needs.