Axis Asset Management company today announced the launch of Axis Focused 25 Fund - an open ended equity fund. The fund will have a concentrated focus on select 25 best ideas at any point of time with a majority of companies being drawn from the top 200 Indian companies (based on market capitalization). The fund has been launched on the strong premise that quality companies tend to maintain their growth trajectory despite downturns.
Data compiled since 2003 -2011 bears this out. Data indicates that the top 10 companies within the BSE 100 Index delivered an average return on equity of 37% as compared to 26% for the BSE 100 index. The share prices too for these companies have witnessed significant outperformance. The share price of these top 10 companies appreciated by as much as 30% as compared to a negative 15.8% for the bottom 10 BSE 100 companies.
Note: This is historical data. Performance above has been calculated on share price. Return on Equity (ROE) = Net Income/Shareholder's Equity. Past performance may or may not be sustained in future. Returns are compounded annualized. Source of data: Bloomberg.
Axis AMC will rely strongly on its internal research capabilities to identify these companies. In line with all the other funds it manages, Axis Asset Management Company Limited will have strict internal risk management limits for the Axis Focused 25 Fund too. These limits will seek to ensure that the portfolio, though restricted to a maximum of 25 companies, is well-diversified across sectors and is not illiquid.
Chandresh Nigam, Head Investments - Axis Asset Management Co. Ltd. said "We believe sustainable business performance drives stock returns. Picking business cycles therefore is important."
Rajiv Anand, Managing Director and CEO - Axis Asset Management Co. Ltd. said "The key feature of the fund is the fact that we will attempt to nurture these companies over their business cycle without being unduly concerned by short term market volatility. It is thus ideal for patient and long term equity investors with an investment time horizon of more than 5 years"
The new fund offer closes for subscription on June 25, 2012 and investors can either invest through monthly installments of Rs 1000 or a one-time investment of Rs 5000.