Launched in December 2009, the Axis Long Term Equity Fund is a tax saving mutual fund which seeks to generate income and long term capital appreciation for its investors from a diversified portfolio consisting of equity and several equity-linked securities. Regarded as one of the best ELSS funds, this scheme looks to invest in quality companies which exhibit strong growth along with a sustainable business model.
This fund is being managed by efficient stock-picker, Jinesh Gopani since April 2011 who boasts of an enviable track record managing this mutual fund. As a matter of fact, since Mr. Gopani stepped in, his smart stock selection has coincided with the fund’s best years. Essentially an open-end scheme, its proven track record has ensured that it remains one of the best investment option today which is further reinstated by the fact that Morningstar assigned it a silver rating which indicates that their analysts think highly of this fund. It also ranks as the largest fund in the Tax Savings (ELSS) Morningstar Category and entitles investors to tax deduction benefits under section 80C of the Income Tax Act.
Although the fund endured a rough time in the years 2011-2012, the fund managed to bounce back pretty well by delivering significant returns between the period September 2013-September 2014 thus rewarding the faith put in by its investors. Furthermore, this mutual fund investment has managed to outperform its category average every single calendar year between the period (2010-2015).
This tax saver mutual fund has a low-risk profile and rewards its investors by providing higher risk-adjusted returns for those remaining invested in the scheme for a longer tenure. Positioned as a large cap tax saving funds, this fund also invests in small and mid-cap stocks to the tune of nearly 25 per cent of its portfolio. Mr. Gopani avoids taking risks by taking short-term calls on the market and instead looks to invest in quality stocks at reasonable valuations. Further, Mr. Gopani lays a strong emphasis on thorough research while looking to invest in stocks that tend to be on the expensive side, in relative terms, without compromising on the quality of companies as long as they meet its internal quality and growth criterion. Gopani has always made it a point to pick well-defined and differentiated product offerings thus ensuring the top sectors in its portfolio are financials, technology, and healthcare.
This strict adherence to quality while ignoring short-term market noise has ensured that the mutual fund performance has remained steady across different time periods. This fund also holds the distinction of being consistently ranked in the first and second category within CRISIL’s Mutual Fund Rankings between the period 2013-2015, which further goes on to showcase its high level of performance. The fund has managed to attract several investors and justifiably so, given the excellent returns and plaudits that it has earned over the years.
One of the best performing mutual funds, this fund might have recently underperformed its benchmark noticeably, probably due to losing two of its founding members from the investment team. However, such periods of underperformance are quite typical and there is nothing to worry about the fund as it has given a hefty outperformance in the preceding three and five year periods. Owing to the recent departures, Mr. Gopani has also been elevated into the role of head of equities while the firm has also recruited two new managers to plug the gaps left by the recent exits. An important thing to be noted is that being an ELSS, it comes along with a mandatory 3-year lock-in requirement. Investors can, however, choose to remain invested for a longer period of time, as any dividends or capital gains obtained from this tax saver mutual fund are completely exempt from tax.
If you are looking for the best performing mutual funds and prepared for a long term approach rather than short term churns, you can approach our financial advisors for customised investment plans.