AXIS SMALL CAP FUND – PERFORMANCE OVERVIEW
Axis small cap fund started in January 2013 by Axis Asset Management Company. This fund has shown outstanding performance over the past 7 years.
The fund is compared with it is benchmark Nifty Smallcap 100 TRI. The fund has performed almost 20.64% per annum from the time of inception.
The fund we are looking is with direct and growth option.
AXIS SMALL CAP FUND – AN OVERVIEW:
Currently, the actively managed fund has a fund size of 2471.56 Cr, with an expense ratio of 0.30%. The expense ratio is seen to be the lowest among the smallcap category.
The category average of smallcap funds is 0.89%. The current NAV is 35.26 as on 21st August 2020.
The fund has almost 50 securities as holdings and top 10 holding shares about 42.7%. The fund has more diversified. When we move to smallcap funds, diversification will help the fund to be with low volatility and better risk-adjusted return.
The P/B (Price to Book Value) is 3.17 and P/E (Price to earnings per share) is at 22.02. The P/E is at a fair price.
The minimum amount to invest in this fund is Rs. 500 through SIP and first-time Lumpsum will be Rs. 5000 minimum.
Returns are taxed up to 15% if redeemed within a year. When redeemed after 1 year, LTCG (long term capital gain) tax of 10% is applicable in the interest earned more than 1 lakhs in a financial year.
AXIS SMALL CAP FUND – PERFORMANCE:
The fund has outperformed its peers. Stands 1st in 3 year’s performance in smallcap funds. Also, 2ndin the category over 5 year’s performance.
The fund has performed almost 20.64% per annum vs 12.59% of Index Nifty Smallcap 100 TRI from the time of inception.
The amount invested in 2013 should have grown to 3.5 times in 2020. But, the benchmark Nifty Smallcap Index has grown 2.5 times.
From the above performance graph, we can understand how volatile the nifty small cap 100 index. The last five year returns are only 1.78% from the index.
Small funds always tend to be more volatile. Whenever the market corrects or crashes, the first stocks to fall will be smallcap funds.
Instead of these volatile and other the situation, the fund manager has maintained almost more than 10% return over every year’s performance.
Only in the last three months performance fund has been beaten by both category average and index.
Even though, investments on smallcap funds should be done with more cautious and it has to be maintained for a long run.
AXIS SMALL CAP FUND DIRECT GROWTH– RISK MANAGEMENT:
In terms of risk management, we will be analyzing four parameters. Alpha, Beta, standard deviation, and sharp ratio.
We will be analyzing these parameters for the last 5 years to find out the volatility and risk-adjusted returns of the fund.
In terms of volatility, the fund is less compared category average and is similar to that of Index.
RISK ADJUSTED RETURN:
The risk-adjusted return is very high when compared to that of both index and category.
Overall, the risk management of the fund is below average volatility and high risk-adjusted return.
AXIS SMALL CAP FUND DIRECT GROWTH – KEY TAKEAWAYS:
· This fund was taken into analysis to show the investors, that even there are few smallcap funds that outperform the market index.
· Investors should be more aware before investing in smallcap funds. The volatility is very higher than other large-cap and midcap funds.
· There are only a few funds like axis smallcap fund, SBI smallcap fund has performed well in the past.
· These funds have fallen in a high note during the current market crash. That’s the reason for the lower performance in the last 6 months.
· Even the P/E value is at a fair price, we advise waiting for a minimum of 2 years. Let a crash happen or the earnings of the market increase.
· Once the earnings increases, we can enter smallcap funds and should hold the fund for minimum 7-10 years to overcome the volatility.