Axis Technology Etf: A Smart Investment Strategy

Exchange-Traded Funds (ETFs) are a great way to diversify your investment portfolio. ETFs are index funds traded on the stock market, providing investors with extensive exposure to the entire stock market and other specific sectors. ETFs are a lower-cost investment option that allows investors to invest in real-time. AxisDirect offers a range of ETF investment options, including gold, index, global indices, and bond/debt funds. Axis NIFTY IT ETF is one such fund that seeks to provide returns that closely correspond to the NIFTY IT Index. This fund carries a very high risk, according to SEBI's Riskometer, and investors should be cautious of funds with narrowly defined investment mandates. Before investing, it is important to understand the potential risks and returns, as well as the tax implications of any investment decisions.

How to buy Axis Nifty IT ETF

To buy Axis Nifty IT ETF, you can follow these steps:

• Directly from the fund house: You can purchase the Axis Nifty IT ETF fund directly from the website of Axis Mutual Fund. This option allows you to buy mutual funds without having to go through a third-party platform.
• Online platforms: You can also invest through online platforms such as MF Central, MF Utility, or the 5paisa app. These platforms provide an easy and convenient way to buy mutual funds.
• Mutual fund distributor: If you prefer assistance or are not comfortable with online transactions, you can seek help from a mutual fund distributor. Most banks also act as mutual fund distributors, so you can connect with your bank to guide you through the process.

It is important to note that the Axis Nifty IT ETF is considered a high-risk fund by SEBI's Riskometer. Therefore, investors should carefully consider their investment goals and risk tolerance before purchasing this fund. Additionally, it is recommended to invest in this fund only through the SIP route, and it is advised not to invest if you need to redeem your investment in less than seven years.

ETF investment advantages

Exchange-traded funds (ETFs) have become increasingly popular with investors since their introduction in 1993. Here are some of the advantages of investing in ETFs:

Low Risk and Cost

ETFs are considered low-risk investments because they are low-cost and hold a basket of stocks or other securities, increasing diversification. They are ideal for individual investors looking to build a diversified portfolio.

Lower Expense Ratios

ETFs tend to have much lower expense ratios compared to actively managed funds. This is because ETFs are passively managed and do not incur costs such as a management fee, fund accounting expenses, and load fees related to their sale and distribution.

Tax Efficiency

ETFs can be more tax-efficient than mutual funds. As passively managed portfolios, ETFs tend to realise fewer capital gains than actively managed mutual funds. Mutual funds are required to distribute capital gains to shareholders if the manager sells securities for a profit, and this distribution is taxable.

Reinvestment of Dividends

The dividends of the companies in an open-ended ETF are reinvested immediately, whereas the timing for reinvestment can vary for index mutual funds.

Flexible Trading

ETFs offer flexible trading as they are bought and sold during market hours when the markets are open. This provides investors with greater flexibility and the benefit of making timely investment decisions.

Portfolio Diversification and Risk Management

ETFs provide exposure to specific sectors, styles, industries, or countries, allowing investors to gain portfolio exposure to desired market segments easily. They are now traded on almost every major asset class, commodity, and currency worldwide.

Transparency

ETFs provide greater transparency to investors. They are bought and sold at a market-based price that is updated throughout the trading day, and share prices vary based on the changing intraday value of the underlying assets in the fund.

Lower Operating Costs

ETFs can offer lower operating costs compared to traditional open-end funds. This is because client service-related expenses are passed on to brokerage firms that hold the exchange-traded securities in customer accounts. Additionally, ETFs do not charge a 12b-1 fee, the annual marketing fee.

Taxation on capital gains

The tax rate on capital gains from your investment in Axis NIFTY IT ETF depends on the duration of your investment. In India, capital gains are classified as either short-term or long-term. If you sell your mutual fund units within a year of purchasing them, your gains will be considered short-term capital gains. On the other hand, if you sell your units after holding them for more than a year, your gains will be considered long-term capital gains.

Short-term capital gains are added to your annual income and taxed according to the applicable income tax slab rates. In contrast, long-term capital gains are taxed differently depending on the type of ETF. For equity ETFs, long-term capital gains up to Rs. 1,00,000 are exempt from tax. Any gains exceeding this threshold are taxed at 10% without indexation benefits. For gold, debt, or international ETFs, long-term capital gains are taxed at 20% with indexation benefits.

It is important to note that the tax laws and regulations may change over time, and the information provided here is based on the current tax structure in India.

Axis Nifty IT ETF holdings

Axis Nifty IT ETF is an open-ended sectoral-technology equity scheme that falls under the Axis Mutual Fund House. The fund was launched on 25 March 2021 and is co-managed by Hitesh Das and Karthik Kumar. The investment objective of the fund is to provide returns before expenses that closely correspond to the total returns of the NIFTY IT Index, subject to tracking errors. The expense ratio of the fund is 0.23%.

As of 31 July 2024, the asset allocation of the Axis Nifty IT ETF was 99.65% in equity, 0.2% in cash and cash equivalents, and 0.15% in debt. The top holdings of the fund include investments in companies such as Tata Consultancy Services Ltd, HCL Technologies Limited, and L&T Technology Services Ltd. The fund has delivered returns of 17.06% since its inception.

The fund is considered to have a very high risk as per SEBI's Riskometer, and investors are advised to avoid funds with narrowly defined investment mandates. It is recommended that investors opt for flexi-cap funds that provide more freedom to the fund management team to invest in companies with maximum expected gains.

Axis Nifty IT ETF performance

The Axis Nifty IT ETF is an open-ended sectoral-technology equity scheme that falls under the Axis Mutual Fund House. It was launched on March 25, 2021, and is mandated to invest at least 80% of its assets in the shares of companies in the information technology sector. The fund had an expense ratio of 0.23% as of October 31, 2024, and no exit load.

As of September 16, 2024, the Net Asset Value (NAV) of the fund was ₹459.7895, with a total fund size of ₹177.71 Cr. The fund has delivered returns of 17.06% since its inception, with trailing returns of 38.22% (1yr), 7.34% (3yr), and 16.48% (since launch). The fund's performance is considered to have very high risk, according to SEBI's Riskometer.

The fund's portfolio as of July 31, 2024, consisted of 99.65% in equity, 0.2% in Cash & Cash Equivalents, and 0.15% in debt. The top holdings of the fund include investments in companies such as Tata Consultancy Services Ltd., HCL Technologies Limited, and Persistent Systems Ltd.

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