Axis Long-Term Equity Fund: Worth The Investment?

The Axis Long Term Equity Fund is a mutual fund that has been in operation for almost 14 years. The fund's objective is to generate long-term capital growth by investing in a diversified portfolio of equity and equity-related securities. The fund primarily invests in large-cap stocks and debt instruments, following a conservative investment strategy. While the fund has underperformed its benchmark in recent years, it has offered very good returns over a long period, and its conservative strategy may be attractive to investors with a moderate risk appetite.

Axis Long Term Equity Fund's performance

Axis Long Term Equity Fund is a tax-saving mutual fund scheme from Axis Mutual Fund. The fund has delivered 15.17% returns since its inception 13 years ago. The fund's latest NAV (Net Asset Value) is Rs 97.1012 as of 2 September 2024, and it has an AUM (Assets Under Management) of Rs 31,887 Cr as of 30 September 2023. The expense ratio of the fund is 1.55, and it has a very high-risk rating.

The fund's performance has been mixed in recent years. While it has underperformed its benchmark in 2021 and 2022, it has also offered very good returns over a long period. For example, in 2021, the scheme gave returns of around 24%, compared to 31.69% offered by its benchmark. However, in the same year, the scheme lost 17% compared to its benchmark, which lost only 8%.

Axis Long Term Equity Fund has lower volatility compared to its peers and is best suited for investors with a moderate risk appetite. The fund's portfolio is largely conservative, with most holdings in Large Cap stocks and debt instruments. As of 30 September 2023, the fund had invested 98.33% in Equity, 1.56% in Debt, and 0.12% in Cash & Cash Equivalents.

The fund offers tax benefits under Section 80C of the Indian Income Tax laws, which allow investments of up to Rs 1.5 lakh in a financial year to be exempt from tax. There is a statutory lock-in period of 3 years for this fund, and investors cannot withdraw their money before completing three years from the date of investment.

The fund's investment strategy

The Axis Long Term Equity Fund is a conservative investment strategy that aims to generate regular long-term capital growth from a diversified portfolio of equity and equity-related securities. The fund invests in companies with strong growth and a sustainable business model, with most of its holdings in large-cap stocks and debt instruments.

The fund offers tax benefits under Section 80C of the Indian income tax laws, which allow investors to exempt up to Rs 1.5 lakh in investments from tax in a financial year. It is important to note that there is a lock-in period of three years for this fund, and it is not suitable for those seeking to redeem their investments in less than five years.

The fund has a very high-risk rating according to SEBI's Riskometer, and investors should be prepared for potential ups and downs in their investment value. The fund's portfolio and performance should be analysed in detail before making any investment decisions.

Axis Long Term Equity Fund is best suited for investors with a moderate risk appetite, and one can expect moderate returns. It is important to evaluate the fund's performance and compare it with its peers before making any investment decisions.

The fund's risk level

The Axis Long Term Equity Fund is considered to have a very high-risk level as per SEBI's Riskometer. This is due to the fund's focus on investing in companies with strong growth and sustainable business models, which can be subject to market volatility and uncertainty.

The fund's holdings are primarily in Large Cap stocks and debt instruments, indicating a conservative investment strategy. However, it's important to note that the stock market has been going through a challenging phase, and the fund has underperformed its benchmark in recent years. While the fund's strategy may be well-suited for long-term growth, there is a risk of short-term underperformance or losses.

Compared to its peers, the Axis Long Term Equity Fund has lower volatility and is best suited for investors with a moderate risk appetite. Investors seeking higher returns may prefer schemes from other fund providers that cater to a more aggressive risk profile.

It's important to remember that all equity funds, including this one, come with inherent risks. Investors should be prepared for potential ups and downs in their investment value and should consider their risk tolerance and investment goals before deciding to invest in this fund.

Additionally, there is a lock-in period for this fund, and investors must remain invested for at least three years, which further underscores the importance of understanding the risk level associated with this fund.

The fund's tax benefits

The Funds' Tax Benefits

Axis Long Term Equity Fund is an Equity Linked Saving Scheme (ELSS) or tax-saving scheme. Investments in an ELSS can help you save taxes of up to Rs 1.5 lakh in a financial year under Section 80C of the Income Tax Act. These schemes come with a mandatory lock-in period of three years, meaning you cannot sell these schemes during this time.

Under Section 80C of the Indian income tax laws, investments of up to Rs 1.5 lakh in a financial year in eligible securities such as this fund are exempt from tax. You can save taxes by showing investment as a deduction under 80C.

If the mutual fund units are sold after 1 year from the date of investment, gains of up to Rs 1 lakh in a financial year are exempt from tax. Gains over Rs 1 lakh are taxed at a rate of 10%. If the units are sold within 1 year of the investment date, the entire amount of gain is taxed at 15%. No tax is payable as long as you continue to hold the units.

Dividends are added to the income of the investors and taxed according to their respective tax slabs. If an investor's dividend income exceeds Rs. 5,000 in a financial year, the fund house also deducts a TDS of 10% before distributing the dividend.

How to invest in the fund

How to Invest in the Axis Long Term Equity Fund

The Axis Long Term Equity Fund is a mutual fund that primarily invests in stocks. It is important to note that there is a three-year lock-in period for investments in this fund, and it is suitable for investors with a moderate risk appetite.

When considering investing in this fund, it is recommended to seek guidance from a panel of experts or a mutual fund distribution firm. They can provide valuable insights and help you make an informed decision.

• Understand the Fund's Performance and Risk Profile: Before investing, review the fund's performance and compare it to its peers. While past performance does not guarantee future results, it can provide insight into the fund's historical returns. Additionally, consider the fund's risk level, which is indicated by the risk meter. A higher risk of negative returns is associated with the right-most red scale, while the left-most green scale indicates a lower risk.
• Determine Your Investment Approach: Decide whether you want to invest a single, complete sum of money or invest small amounts over time. The latter approach, known as a Systematic Investment Plan (SIP), allows you to invest regularly, regardless of market conditions.
• Choose Between Regular and Direct Plans: The Regular and Direct plans of the fund are identical except for the commission paid to your mutual fund broker/distributor. Regular funds have a higher expense ratio, while Direct funds have a lower expense ratio, resulting in higher returns for investors.
• Consider the Expense Ratio: The expense ratio is the annual fee charged by the fund to manage your investment. It is typically deducted from the Net Asset Value (NAV) daily. A lower expense ratio is preferable as it leads to higher returns.
• Review the Fund's Portfolio: Analyze the fund's portfolio holdings, including the percentage of investments in Large Cap, Mid Cap, and Small Cap stocks. Ensure that the fund's investment strategy aligns with your risk tolerance and financial goals.
• Consult a Financial Advisor: Before making any investment decisions, consider seeking advice from a qualified financial advisor. They can provide personalized guidance based on your financial situation and help you assess if this fund is suitable for your investment objectives.
• Complete the Necessary Paperwork: Once you have decided to invest, you will need to fill out the required documentation and submit it to the fund provider. This may include providing personal information, investment goals, and risk tolerance.
• Monitor Your Investment: After investing, regularly review the fund's performance and its impact on your overall financial portfolio. Remember that mutual funds are subject to market risks, and their performance can vary over time.

By following these steps, you can invest in the Axis Long Term Equity Fund. Remember to assess your financial goals, risk tolerance, and time horizon before investing, and always seek expert advice when needed.

Frequently asked questions