20190507013-Hybrid Fund (May 2019)-Brochure€¦ · across the developed world as waning global growth and geo political uncertainty weigh on the global economy. • Crude Oil –

Quick Take - Equity

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Equity market valuations are broadly reasonable adjusted for the cyclical low in earnings and potential for revival going forward.

We remain bullish on equities from a medium to long term perspective

Investors are suggested to have their asset allocation plan based on one’s risk appetite and future goals in life.

Quick Take - Fixed Income

10 yr G-Sec : Last 1 year

7.41%

7.77% •selective corporate long bonds

Manageable Inflation and attempts to stimulate growth in the economy are likely to push bond yields down

We advise investors to stay invested in short to medium term strategies and actively look at credit funds. Accrual investors may look at medium term roll down strategies to lock in attractive rates at current levels.

Opportunities have emerged across the corporate bond curve, Added maturities across portfolios through

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9.4%

Key highlights

HYBRIDOUTLOOK

MAY 2019

A spiking crude and early corporate results saw the markets drift listlessly amidst rising volatility. The S&P BSE Sensex and NIFTY 50 ended the month up 0.9% and 1.1% respectively. Mid and small caps continued their underperformance falling 3.8% and 3.1% respectively. The market returned to largely narrow market wherein select large caps and a few high quality midcaps saw gains while the rest of the market saw losses.

Domestic GDP has been seen slowing in H2 FY19 basis high frequency numbers especially on consumer durables and essential services. Given this decelerating trend, corporate earnings for companies in this sector are likely to remain subdued. The earnings season got off to a rocky start. Bright spots were seen in a few IT and private banks in our coverage list. Mid cap and Small cap companies continue to report weak earnings on the back of an in general demand slowdown. This is reflected in the stock price moves in this space. The gap between the NIFTY 50 & the NIFTY Midcap 100 index on a 1-year basis is in excess of ~20%.

As India votes, the markets are in limbo. Given the pro incumbency sentiment, we believe the elections are unlikely to deliver significant negative surprises. However, the balance of power in the lower house of parliament will be keenly watched post elections. Given the large 2014 mandate, the Modi government had taken on several key legislative projects

ushering much needed changes to the way business is done in India. The conclusion of these elections will eliminate much needed policy uncertainty

• RBI maintains Neutral stance, 10 Year at 7.41%: In its first monetary policy for the new year RBI decided to further reduce the policy repo rate by 25 bps along expected lines. The RBI cited lower than expected inflation and GDP growth estimates as reasons for the latest policy action. The RBI’s

Key Market Events

INVESTORS

Equity Investors

Debt Investors

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Do not Panic - Corrections are healthy.Timing the markets is dangerous - Invest Systematically, Invest Regularly, Invest Responsibly.Be fearful when others are greedy.Be greedy when others are fearful.

Select a fund that meets your risk profile. Investing in credits is all about process.Select a fund house with a robust investment process and credit management system.

DISTRIBUTORS

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Investors may worry - Calm your investors, corrections are ideal entry points for long term investors.

Effective Portfolio Management Key.

Investors trust you. Be Responsible!

RESPONSIBLE INVESTING – TIP FOR THE MONTH

Key highlights (Contd.)

dovish stance is in tandem with other central banks across the developed world as waning global growth and geo political uncertainty weigh on the global economy.

• Crude Oil – A Cause for Concern: rent crude ended the month at US$72.2/barrel as the US decided to end waivers to large oil buyers like China & India as part of the larger Iran sanctions. The India crude basket followed suit and ended the month at US$72/barrel.

• CPI Inflation – Positive Trend Reversal: etail Inflation in India continued to normalize in the month of March. CPI inflation stood at 2.86 % in March compared to 2.57 % in February 2019. The rise in the headline index in February was partly attributable to a rise in the year-on-year rate for food inflation and a spike in crude prices.

• Currency – Resilient yet fairly valued: Currency has been a big positive over the last few quarters relative to the rest of the EM basket and several global currency pairs. The RBI Swap program, has further bolstered currency markets, sapping excess dollar liquidity from the system. In spite of this currency strength, on a REER basis the INR continues to remain fairly valued.

• Global Round Up: A dovish Fed and a US recession risk dragged the US 10 year to 15 month lows during the month. Loose monetary policy was also implemented by the ECB and Japan on concerns over weaker global growth. On the contrary, high frequency manufacturing and services indicators across the world however have seen a positive turn, most prominent amongst the pack is the Chinese PMI indicator that moved back into positive territory.

Equity Markets

We remain bullish on the India story. Given our focus on quality and are bias towards fundamentally sound business models, the big trend we are looking to play is the corporate deleveraging and operational efficiency story that is unravelling. Our investment philosophy has always looked to capture earnings driven growth over sustainably large time periods. This has worked well for us and our portfolios are testament to this philosophy.

In the medium term we continue to remain ‘cautiously optimistic’ and have been selective in our equity allocations. The recent trend reversal shows signs of a bottoming out in the markets and hence, we advise investors to deploy funds in a phased manner. Systematic investments into equity products could also help investors ride out short term volatility.

Debt Markets

Reasons for the Sharp rises in yields

The 10-year benchmark has been a misleading indicator this month. While the headline indicator points to a minor rise in

Market View

yields, the situation has been significantly different across the corporate curves. 3 Year AAA corporate bonds have seen a spike of approximately 35-40 bps while 1 Year A1+ CDs and corporate bonds have seen yields rise from 7.40% to 7.70%. We attribute this sell off to the following factors

• Tight banking liquidity & Weak Government Spending – The government has been sitting on cash in the run up to the elections. Furthermore, this lack of spending has put a knock down pressure on PSUs who have organized larger issuances in the first half of the year (A deviation from past trends) to fund projects, further adding to pressures on yields.

• Limited Durable Liquidity Injection by RBI – The RBI has had announced Fx Swaps over 2 tranches totaling roughly Rs 70,000 Cr. However, OMOs and the Fx Swap have fallen short of market requirements adding to pressures on the yield curve.

• Market Sentiment – The markets had been over optimistic on the extent of rate cuts. The latest RBI policy action tempered future expectations. This has led to a material correction in sentiment thus affecting bond yields

• Crude Spike - India has historically enjoyed better terms of trade with Iran given the extended credit terms, low cost of transport & insurance and settlement in Indian rupees. A loss of a key supplier is likely to hurt India materially given that Iran is India’s 3rd largest oil supplier.

Given the persistently tight liquidity conditions in the market, we do not rule out further OMO’s and other liquidity enhancement options. Post elections, we also anticipate a return in government spending alleviating pain especially in PSU bonds. This spike in yields offer significant opportunities to investors looking locking in short term rates. On the credits space concerns over a few high profile defaults have further raised rates in lower rated securities (AA and below).

We have selectively added duration in our portfolios through 3-year AAA corporate bonds & select corporate long bonds. We have also added select 1-3 year AA credits across our credit portfolios in line with our credit view. AA Credit spreads currently are hovering between 275-300 bps over the Repo rates making them an attractive investment opportunity.

As always, our prudent investment norms and strong risk mitigation framework form the bedrock of all our credit evaluation. The corporate bond spread in the short to medium tenor space also offers material opportunities for buy and hold investors and hence believe that investors should consider deploying funds in short term funds & roll down strategies.

Our View

*Based on the debt portion of the portfolio as on date given above. The yield to maturity given above is based on the portfolio of funds as on date given below. This should not be taken as an indication of the returns that maybe generated by the fund and the securities bought by the fund may or may not be held till their respective maturities. The calculations are based on the invested corpus of the debt portfolio. For instruments with put/call option, the put/call date has been taken as the maturity date. Note: Allocation & duration is based on the current market conditions and is subject to changes depending on the fund manager’s view of the markets. #Hedged Equity/Cash-futures arbitrage

AXIS REGULAR SAVER FUND• Combines stability of debt with potential for capital growth through equity

exposure.• Equity allocation is managed between 10-25% of the net assets. • Targets regular income through debt portion.

AXIS TRIPLE ADVANTAGE FUND• Provides diversification across equity, fixed income and gold thereby reducing

risk from single asset.• Follows regular rebalancing approach within each asset class which allows

investors to “buy-low sell-high”.• Offers lower transaction cost through portfolio rebalancing process.• Average yearly return of the Triple Asset Portfolio (equal allocations in Equity,

Debt and Gold) has been negative only twice in last 20 years^.^Calendar years

Primary Asset Class

Across Equity, Fixed Income and Gold

Gold Allocation

11.6%

Equity AllocationAverage Maturity *

4.7years

70.7%

AXIS EQUITY SAVER FUND^• Employs better diversification across assets and reduces volatility

• Helps in limiting downside • Provides opportunity for improved risk-adjusted performance

$• Provides tax efficiency$Please consult your tax adviser with respect to the specific tax implications^ Equity including Arbitrage and Fixed Income

42.1%

Primary Asset Class

Invest across Equity, Fixed Income and

#Arbitrage

#Arbitrage Allocation

34.6%

Equity Allocation Debt Allocation

23.3%

(Including cash and cash equivalent)

AXIS CHILDREN'S GIFT FUND• The fund provides goal planning benefit by way to plan for your child's education

or any other goal that he / she wants to pursue.

• Long term investment approach for investors and managers

• Employs asset allocation benefit by investing in equities and fixed income income securities

• Equity investment aims for wealth creation with fixed income portion targeting to curb volatility

67.7%

Primary Asset Class

Invest across Equity# and Fixed Income

Yield to Maturity *

8.81%


32.3%


AXIS DYNAMIC EQUITY FUND• The fund uses a systematic rules based model to determine equity exposure

thereby eliminating human subjectivity while determining equity allocation • Removes the need for market timing for investors; does not maintain a fixed

allocation to equity but instead uses a model to dynamically adjust its equity allocation over time

• Gross equity exposure will be maintained between 65% to 100%; availing equity taxation^

• Protects downside by reducing drawdowns ^Please consult your tax adviser with respect to the specific tax implications

33.8%

Primary Asset Class

Dynamic equity allocation (30-100%)

Arbitrage Allocation

31.6%


34.7%


AXIS EQUITY HYBRID FUND• 2-1 Asset Allocation Solution: Hybrid fund investing up to 80% in equity and rest

in debt

• Equity component will follow a large cap biased bottom up best ideas strategy. The fund may also invest up to 30% in mid cap companies.

• Aims to provide tax efficient and risk adjusted returns through a research oriented and quality centric investment approach

• Potential of equity and stability of debt all while being tax efficient

1.4Primary Asset Class

Equity upto 80% and rest in fixed income.

Yield to Maturity *

8.44%

Modified Duration

1.1(Including cash and cash equivalent)

Average Maturity

Yield to Maturity *

8.63%

Average Maturity*

310

Current Equity Allocation

20.4%

Primary Asset Class

• Fixed Income• Equity upto 25%

days

yearsyears

HYBRIDOUTLOOK

MAY 2019

AT A GLANCE

$*Please consult your tax adviser with respect to the specific tax implications Equity asset mix refer to unhedged / net equity

Axis Children’s Gift Fund

Axis Equity Saver Fund

Axis Regular Saver Fund

Regular income while managing

risk Objective

Capital appreciation and

income distribution

Long-term investment to

help in saving for child’s needs as he/she grows upO

BJE

CTIV

E

Axis Dynamic Equity Fund

Axis EquityHybrid Fund

Axis Triple Advantage Fund

Take advantage of diversification

by investing across 3 asset

classes

Equity

Fixed Income

Gold

AS

SET

MIX

10 - 25%

75 - 90%

20 - 45%

20 - 35%

40 - 75%

25 - 60%

UN

HEG

DED

EQU

ITY

Current Allocation

Strategy

Market Cap Mix

20.4%

Actively managed, Large Cap Biased

69% Large cap, 22% Midcap, 9% Small cap

Relatively stable over time,

Multi cap strategy


41.1% 67.7%

Multicap equity strategy

77% Large cap, 19% Midcap, 4% Smallcap

FIX

ED IN

CO

ME

Current Allocation

Strategy

Average Maturity*

Modified Duration*

79.6% 34.6% 32.3%

High quality accrual strategy

Relatively stable over time, Active duration strategy

Active duration management

310 days

270 days

3.8 yrs

2.6 yrs

2.9 yrs

2.1 yrs

HED

GED

EQU

ITY

HedgedEquity

GO

LD Gold

TAX

ATI

ON

$Taxation Debt Equity Equity

NA NA NA

YTM* 8.63% 8.94% 8.81%

NA

NA NA NA

Current

Allocation:

23.3%

NA

30 - 100%

0 - 35%

33.7%



34.7%

Short term accrual startegy

136 days

114 days

Equity

7.63%

NA

Current

Allocation:

31.6%

NA

65-80%

20 - 35%

68.9%


90% Large cap, 10% Midcap, NA Small cap

31.1%

Active duration management Average Maturity

1.4 years

Equity

8.44%

NA

NA

65 - 80%

10 - 30%

10 - 30%

70.7%


17.7%

4.7 yrs

3.1 yrs

Allocation is stable over time, Multicap strategy

8.39%

NA

Current Allocation:

8.39%

Equity

Long duration strategy

Units issuedby REIT’s NA

1.1 years

NA

Capital appre -ation and income

generation by managing risk through active

asset allocation

ci Capital appreciation along with current income by investing in a mix of Equity and Equity related Instruments, debt Instruments

and money market instruments.

Hedged Equity 20 - 60% NANA 0 - 35%NA NA

0-10% 0-10% 0-10% 0-10% 0-10%

Data as on 30th April, 2019. Source of data: Bloomberg, ACEMF

Disclaimer: Past performance may or may not be sustained in the future. Sector(s) / Stock(s) / Issuer(s) mentioned above are for the purpose of disclosure of the portfolio of the Scheme(s) and should not be construed as recommendation. The fund manager(s) may or may not choose to hold the stock mentioned, from time to time. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s). This document should not be construed as research report.

Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to ̀ 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC) Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Axis Regular Saver Fund(An open-ended hybrid scheme investing predominantly in debt instruments)

This product is suitable for investors who are seeking*:

• Capital appreciation while generating income over medium to long term.

• Investment in debt and money market instruments as well as equity and equity related instruments.

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Riskometer

Investors understand that their principal will be at moderately high risk

LOW HIGH

Moderate ModeratelyHighModerately

Low

HighLo

w

Axis Triple Advantage Fund(An open-ended scheme investing in equity, debt and gold)


• Capital appreciation & generating income over long term.

• Investment in a diversified portfolio of equity and equity related instruments, fixed incomeinstruments & gold exchange traded funds.


Riskometer


LOW HIGH


Low

HighLo

w

Axis Equity Saver Fund(An open-ended scheme investing in equity, arbitrage and debt)



• Provide capital appreciation and income distribution to the investors by using equity and equity related instruments, arbitrage opportunities, andinvestments in debt and money market instruments.


Riskometer


LOW HIGH


Low

HighLo

w

Axis Children's Gift Fund(An open-ended fund for investment for children, having a lock-in of 5 years or till the child attains age of majority (whichever is earlier))


• Capital appreciation & generating income over long term.

• Investment in debt and money market instruments as well as equity and equity related instruments.


Riskometer


LOW HIGH


Low

HighLo

w

Axis Dynamic Equity Fund(An open ended dynamic asset allocation fund)



• Investment in equity and equity related instruments as well as debt and money market instruments while managing risk through active asset allocation.


Riskometer


LOW HIGH


Low

HighLo

w

Axis Equity Hybrid Fund(An open-ended hybrid scheme investing predominantly in equity and equity related instruments)


• Capital appreciation along with generation of income over medium to long term.

• Investment in equity and equity related instruments as well as debt and money market instruments.


Riskometer


LOW HIGH


Low

HighLo

w

20190507013-Hybrid Fund (May 2019)-Brochure€¦ · across the developed world as waning global growth and geo political uncertainty weigh on the global economy. • Crude Oil –

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