Axis Long Term Equity

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Large-caps give stability and small-caps add spice to this fund’s performance

It’s never too early for your tax-saving investments. If you plan to deploy money in an equity linked savings scheme (ELSS) this fiscal, you can start now instead of waiting till February or March. Axis Long Term Equity is among the best choices in this category.

With an annualised return of nearly 28 per cent over the past three years and 20 per cent over the past five years, the fund ranks in the top quartile among peers. It has beaten its benchmark, S&P BSE 200, by a wide margin, with outperformance in the range of 10-13 percentage points over three to five years.

The fund is a very consistent winner — on a daily rolling basis, its annual returns have been better than the benchmark’s almost always.

Since its inception in late 2009, the fund has done well across market cycles, rallying strongly during upsides and containing downsides during weak phases of the market. For instance, while the benchmark has lost more than 3 per cent since the January 2015 highs, the fund has gained about 3 per cent.

Axis Long Term Equity maintains high exposure (96 to 98 per cent of the corpus) to equities most times, with the chunk — 75 to 85 per cent of the portfolio — in relatively stable large-cap stocks. Mid-cap and small-cap stocks that make up the rest help provide a kicker to returns during market rallies

. The fund has a growth investing strategy and does not mind paying a premium for quality companies.For instance, the fund’s top holdings HDFC Bank and Kotak Mahindra Bank are costlier than most peers but have consistently registered good growth.

Stock appreciation and healthy inflows have made Axis Long Term equity the largest in its category with corpus close to ₹9,000 crore.

This, combined with a buy-and-hold approach that reduces portfolio churn, has helped the fund keep its expense ratio low compared with most peers. In the last year, the fund added just two new stocks to its portfolio and exited three.

The fund’s picks in both large-caps and smaller stocks have mostly played out well in the long term.

For instance, stocks such as Bajaj Finance, Eicher Motors and Symphony have been multi-baggers over three to five years.

Timely exits from losers such as Tree House Education & Accessories also helped. The optimism of the fund manager (Jinesh Gopani) in the domestic growth story has manifested in private banks, finance companies and autos being the largest sector holdings.

PSU banks, though, have been a no-no, given the asset quality concerns. The fund also bets selectively on stocks in export-oriented sectors such as pharma and software as a hedge.

Birla Sun Life Dynamic Bond Fund

Invest Birla Sun Life Dynamic Bond Fund Online


Sometimes factors that are not in your control can have an impact on your financial goals.

By investing in Birla Sun Life Dynamic Bond Fund (An Open-ended Income Scheme) you have gone a long way towards potentially ensuring that they aren’t affected by fluctuating interest rates.


image2.jpg When interest rates are likely to rise:

The fund invests in short-term bonds that mature faster, so that it can invest in newer bonds of higher rates.

image2.jpg When interest rates have reached their peak:

The fund invests in long-term bonds. Your investment then benefits from a higher interest rate for a longer term.

image2.jpg When interest rates are going to fall:

You will gain by selling your higher interest-rate bond at a profit. When the interest rate falls, the prices of bonds rise. Hence, bonds that were bought when yields were high are due to generate capital gains when they are sold in a falling interest rate scenario.

The investment team of Birla Sun Life Mutual Fund, through its research and process driven investment strategy, would endeavour to capitalise on the available opportunities in a timely manner.



Mutual Fund Misconception

The overall Assets under Management (AUM) figure of the Indian Mutual Fund Industry is fast hurtling towards the 14 lakh crore mark. As a product, Mutual Funds have gained in popularity over the past few years, with the stock markets breaking out in 2012 after a long hiatus. In this article, we aim to debunk five common myths that surround Mutual Fund investing. Read on to know more.

You need to have a high degree of Financial Intelligence to invest in Mutual Funds

Quite on the contrary, Mutual Funds as a product are designed to benefit investors with a lower than average working knowledge of the financial markets. Mutual Funds employ expert teams of analysts and fund managers who work full time to analyze the markets and investment options that fit in with the fund’s overall investment objective. In fact, we’ve often observed that investors with a relatively low degree of financial intelligence tend to fare better than more sophisticated investors, who display the tendency to churn their portfolios more often in an attempts to ‘manage the manager’! This works to their detriment. One doesn’t need to be a market wiz to successfully invest in Mutual Funds. In fact, MFs are ideally suited for those who would not normally invest in the financial markets directly, by offering them an access to skilled fund management capabilities.

It’s better to invest in a fund with a low NAV (Net Asset Value)

This is probably one of the most common myths related to the Mutual Fund industry in India, and the chief contributor to the widespread proliferation of NFOs over the years (which launch themselves at an NAV of Rs 10). Let’s explain this one simply – a low NAV (which results in you buying more units for the same Rupee amount) does not imply that you’ve got more ‘bang for the buck’ or ‘value for money’. What matters is the movement in the underlying securities in the Mutual Fund’s portfolio. The NAV of an Mutual Fund scheme bears no relationship to its performance potential. Investors should focus their analysis on the portfolio of investments held by the scheme and its suitability to their needs", Shastri of Peerless Mutual Fund goes on to say.

For instance, if the underlying portfolio of securities in a fund with an NAV of 10 moves up by 10 per cent, the new NAV will be Rs 11. In the same timeframe, if the underlying portfolio of securities in a fund with an NAV of Rs 200 moves up by 10 per cent, the new NAV will be Rs 220 – resulting in the exact same appreciation in your fund value.

All Mutual Funds are linked to the stock markets

Contrary to the popular belief which equates Mutual Fund Investing with Stock market Investing, all Mutual Funds do not invest in the stock markets. There are mutual funds which invest across the spectrum of bond markets as well. There are a few hundred debt funds which exist in the market, which take zero exposure to the stock markets (and therefore have lower risk and return potential). There are MF schemes for virtually every risk profile. For short term investments and risk averse investors, liquid and other debt funds may offer significantly lower volatility solutions.

Past Returns are indicative of Future Returns

This is quite possibly the greatest myth (or trap!) of all. It’s a myth that just because a mutual fund scheme has returned 100 per cent in the past calendar year, the trend will continue. There are occasions when a specific stock pick becomes a ‘multibagger’ and hence inflates the performance of a scheme over shorter timeframes. This is no reason for you to invest in that particular fund. On the contrary – what goes up in the stock markets also comes down. The markets are great leveler! Approach mutual funds which have shown a sudden appreciation in their NAV with an element of caution. Choose mutual funds that have shown long term growth track records (7 to 10 years) and performed across market cycles.

Mutual Fund Online

BNP Paribas Short Term Income Fund

BNP Paribas Short Term Income Fund, The note highlights how in volatile condition both external and internal we have been able to demonstrate steady performance.

Volatile market; Rock steady performance

Events that shook the markets:

1. Referendum on Brexit: On June 23, 2016 UK voted to leave the European Union. Britain also lost its top AAA credit rating, meaning the cost of government borrowing will be higher. The pound touched a 30-year low.

2. When will the Fed Lady Sing? This has been a question that all market participants have been trying to answer. Around the policy time there is lot volatility in the markets. Now closer to the date in December 2016 we may witness similar volatility.

3. Deutsche Bank USD 14 bn scare: The U.S. Justice Department demand that Deutsche bank pay $14 billion to settle the bank’s role in the sale of risky mortgages before the financial crisis.

4. Surgical strikes by India

During these volatile external environments, there has been a lot of movement in the 3Y AAA and 1Y AAA papers as show below in the graph. BNP Paribas Short Term Income Fund due to active management and good calls during these times was able to ensure the volatility was very less.

How did BNP Paribas Short Term Income Fund performed in this volatile time?

Outlook for Short Term Income Fund

Normal monsoons and good rainfall distribution should lead to lower food inflation going ahead and should open up further room for monetary easing.

RBI has indicated that the neutral/real rate of interest is dynamic which is currently around 1.25%, lowering it from an earlier stated 1.50% to 2.00%. This is largely due to globally neutral real rate having come down.

Inflation may be lower going forward. With RBI changing its stance on real rates, we expect another 50 bps rate cut over the next 6 months and the sovereign yield curve should steepen going forward.

This will augur well for BNP Paribas Short Term Income Fund. Investors looking at an investment horizon of 15-180 days should seek exposure in BNP Paribas Short Term Income Fund.

Scheme highlights

Yield to Maturity: 7.75%

Average Maturity: 3.06 years

Modified duration: 2.31 years

BSL Tax Relief’96 Fund

Birla SunLife Tax relief 96 has had a successful run for over 2 decades now, helping investors create substantial wealth, specially for the ones who remained loyal with it through its journey. BSL Tax Relief’96 Fund is recommended by Prajna Capital in ELSS category of funds for the investors for the upcoming tax season.

The fund has a superior long term track record of over 20 years, wherein it has outperformed its benchmark (S&P BSE 200) by ~14% CAGR. Also it is one of the oldest tax saving scheme in the industry. Due to its consistency in building a quality portfolio, the fund has been able to generate higher risk-adjusted returns for its investors.

Some key highlights of the Birla Sun Life Tax relief 96 fund:

vBSL Tax relief 96 is an open ended tax saving scheme. The fund adopts a multi-cap strategy with 55-60% large cap exposure and rest in quality midcaps & small caps

v Fund follows a bottom-up approach to investing. Decision of stock selection involves in-depth research not made simply basis meeting the top level management. This is unique approach as our fund management team also meets the company’s bottom rung of the of management (staff, middle level managers, company vendors and all other stake holders) – 360 degree review

v Fund performs a ground level research on companies it adds to the portfolio – review of competition, market share, perception of company’s product, solutions provided by the company, 360 degree channel tech, what percent of revenues is the company spending on R&D etc.

v Fund focuses on stocks which witness gradual upturn in the economy

v Fund focuses on investing in companies which are debt free, has strong promoters with professional management, financially sound and managements which are empowered to take decisions

v Fund refrains from taking any cash calls even during market stress times. Over last 3 years fund had not more than 1% exposure to cash. The same was maintained to meet only redemptions needs. Thus fund takes the best advantage of staying invested in equities due to 3 year lock-in period

v Invests in compelling business no matter what size and sector

v Absolute return: Though fund focus remains to outperform its benchmark, through bottom up stock picking approach funds strives to deliver superlative absolute returns

Scheme/Benchmark Returns(%)
3Yr 5Yr 10Yr 20Yr
BSL Tax Relief’96 22.39 19.44 10.90 27.37
S&P BSE 200 8.01 12.73 8.01 13.40

Data as on 30th November, 2016. Source: MFI Explorer

Birla Sun Life Medium Term Plan

BSL Medium Term Plan Online

Over the past few months, the fund has invested in sovereign bonds to guard against the erstwhile credit concerns. Currently the G-Sec holding in the

portfolio has been brought down significantly (~11%) by booking profits. The cash and CBLO holding in the portfolio is ~28%. The surge in the supply of

credits in various spaces like promoter financing space, real estate space, infrastructure projects / cash flow based projects, securitisation space is
expected to provide ample opportunity for the fund to deploy its cash holdings going forward. Currently, the YTM of the portfolio is 9.08% and the modified duration is 1.98 yrs.

Franklin India Short-Term Income Plan

Invest Franklin India Short-Term Income Plan Online

Key Highlights:

· Open ended short term income fund whose investment objective is to provide stable returns by investing in fixed income instruments

· Invests primarily in corporate bonds with a focus on higher accrual income

· The fund focuses on investment opportunities at the short end of the yield curve by maintaining a low average maturity profile

· The fund is positioned between a liquid fund and an income fund in terms of risk reward

· This fund is suitable for investors with a time horizon of 9-15 months with moderate risk profile who prefer higher accrual and credit quality focused debt fund

Fund Details
Average Maturity 1.84
YTM 10.38%
Duration 1.46

Load Structure:

Entry Load: Nil

Exit Load: 0.50% if redeemed / switched out within 1 year of allotment date.

Gold Mutual Fund Returns

Gold Mutual Fund Online

Despite the current short term bounce, the returns of gold funds over a 5 year period have been disappointing

Gold is not forever

The Brexit bedlam triggered shock waves in global markets, but the fear benefitted one specific set of investors: gold bugs. Gold prices have just hit multi-year highs amid renewed market jitters over how Britain’s decision to leave the European Union will impact growth and earnings. However, the short term spike in gold price does not hide the fact that the long-term performance of gold mutual funds has been pedestrian.

U.S. gold is trading near highs of $1,370. Indian gold prices have moved up in-step. Standard gold (99.5 purity) in Mumbai has climbed to R31,315 per 10 grams. Pure gold (99.9 purity) is trading near R31,465 per 10 grams. In December 2015, gold in the domestic markets was trading just below R25,000.

Just after Brexit became a reality, World Gold Council said: ‘With Britain voting to exit the European Union, we expect to see strong and sustained inflows into the gold market driven by the staggering level of protracted uncertainty that investors now face.’

Cashing in on fear
The month ended June 30 has seen 4.3-8.99% gains for gold mutual funds, shows data from Value Research. This has led too high year-to-date gains on gold savings funds. Invesco India Gold Fund (31.19%), Axis Gold Fund (up 25.49%), IDBI Gold Fund(24.01%) and SBI Gold Fund (21.92%) lead the charts. Gold ETFs, which passively track gold prices, have clocked YTD gains of 24-26%, in-line with gold’s swashbuckling innings.

The feel-good factor may stay when you look at 1-year returns as well. For the one year ended June 30, gold ETFs have clocked 16.68-17.86% gain, with UTI Gold ETF, ICICI Prudential Gold ETFand Goldman Sachs Gold ETF leading the charts. Among gold savings funds, returns ranged from 12.1 per cent to 15.8 per cent.

But returns for longer time horizons like 5 years change the picture drastically.

Gold savings funds as a theme were heavily marketed after the second quarter of 2011, a year when equity benchmark Sensex dropped by over 24%. Gold touched all-time highs in 2011, as demand for safe-haven assets grew in the face of economic turmoil and weak equity markets. Investments at those highs haven’t really paid off.

The 5-year return for Kotak Gold Fund Regular Plan is 4.42%,Quantum Gold Savings Fund gained 5.09% and Reliance Gold Savings Fund has managed 4.7% in the same period.

There are nearly 10 gold ETFs with a 5-year history. In terms of returns, they have given 6.3-6.55% gains in this long tenure. Those returns are paltry. In the same five year period ended June 30, large-cap equity funds gave 4.2-16 per cent, mid-cap funds 8.38-23.91% and even debt funds (dynamic) managed 7.6-11.16%.

Tata Short Term Bond Fund

Tata Short Term Bond Fund Online
The fund seeks modest return with high liquidity from a portfolio of debt and money market instruments.

This fund has been a middle-of-the-road performer in the short-term category, with a CAGR of 9 and 9.2 per cent on the regular option over three and five years, 20 to 30 basis points ahead of the category.

The fund follows a conservative strategy by keeping its average portfolio maturity within the one- to three-year range at most times. It also plays it quite safe on credit quality, with G-secs or AAA bonds dominating the portfolio. As of April 2016, the fund had as much as 88 per cent of its portfolio parked in G-secs (19 per cent), AAA bonds (55 per cent) and top-rated commercial paper (14 per cent). The portfolio mix shows that the fund owns very short-term corporate debt, with a couple of long-dated G-secs to take advantage of rate falls. The strategy makes it a good fund for investors looking for returns with low volatility.

There is a substantial differential in the expense ratio between the direct and regular plans of this fund, with the direct plan charging a very modest 0.25 per cent against the regular plan’s 1.08 per cent.