Axis Bank Equity Mutual Funds

Investment Objective

The main objective of the Axis Mutual Equity Fund is to provide its investors with a chance to grow wealth over a long investment period. This scheme mainly invests in equity and equity-linked securities according to the ratio stated in the fund’s mandate. The underlying stocks are picked by the fund manager after thorough research to ensure that the returns from the portfolio are aligned with the category benchmark and expectations.

The strategy to select the underlying stock selection strategy can be based on growth/value/ or growth at rational prices. Capital appreciation is a result of the underlying stock prices over a set investment period. This can also be when the dividends provided by the fund are reinvested to fund the purchase of additional units of the fund. The investor should know that the Axis Mutual Equity Fund does not guarantee that the investment objective will be met.

Risks Involved in Axis Mutual Equity Funds

The Axis Mutual Equity Fund has moderately high to high market risk as opposed to balanced or debt funds. The fund price might fluctuate according to changes in the price of the underlying stocks. The price of the stock might change due to a change in the volume, exchange rates, interest rates, tax reforms, and other economic developments. 

The risk extent is also dependent on the portfolio diversification level. Sector or theme-based Axis Mutual Equity Fund has higher market risk than a diversified equity fund portfolio. Likewise, large capitalisation funds have a lower investment risk in comparison to small-cap or mid-cap funds.

Return Potential of Axis Bank Equity Mutual Funds

The returns generated by this scheme correspond to the risk assumed by the individual. These funds usually provide higher returns than balanced or debt funds. These funds deliver an average 12% return over an investment horizon of five years. However, there is no assurance of promised returns, and the performance of these funds from one time period to the other.

Due to the higher risk factor, a focussed mutual fund has the ability to deliver higher returns than diversified equity portfolios. Alternatively, large cap funds can provide steady returns across different market cycles. A potential investor can consider adding small-cap or mid-cap funds to their portfolio to boost returns.

Who Should Invest in Axis Bank Equity Mutual Funds?

Mutual fund schemes are best suited for individuals who wish to generate long-term capital appreciation over a period of five years or more. Since the fund values are subject to market volatility, these funds are suited for investors with a high tolerance for risk. The higher return potential of the Axis Mutual Equity Fund makes them perfect for achieving long-term goals like purchasing property, retirement planning, wedding expenses, etc.

To fully utilise the return generating potential of these equity funds, the investor needs to park the funds throughout the investment horizon, which can be up to 12 years and more. This means that the investor should consider parking only such surplus funds in this scheme which they do not require in the immediate future.

Tax on Axis Bank Equity Mutual Funds

You cannot sell your Axis Mutual Equity Fund within three years of the purchase date. When you sell your investment after three years, long term capital gains tax will be applicable. If your long term capital gains tax exceeds Rs. 10 lakhs, the proceeds will be taxed at 10%. Nevertheless, you can claim income tax deductions on your taxable income in accordance with the rules of Section 80 C of the Income Tax Act. The eligible tax deductions are limited to Rs. 1.5 lakh per year.