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Axis Small Cap Fund: A Detail Review of the Historic Returns & More

Axis Small Cap Fund is a small-cap fund from Axis mutual fund. Small-cap funds are those who invest in equities having a market capitalisation of less than Rs 5,000 crores. Naturally, the companies whose market cap is less than Rs 5,000 crore is often considered to be volatile and investing in them comes with its own risks. In this regard, the same can be said about the Axis Small Cap Fund: it is a highly volatile mutual fund that can promise high returns but at great risks. And yet, when we take a look at the historical returns of this fund since its inception in 2013, the Axis Small Cap fund has performed staggering well. In fact, the returns have been at such a rate that every two years, the investment amount has almost doubled.

This makes the Axis Small Cap Fund quite an interesting mutual fund. But to know more about it, we have to take a detailed look at their historical returns. So, without further ado, let us proceed.

About the Axis Small Cap Fund

NAV refers to the Net Asset Value of a company or a fund. It is represented as price per unit. As of 23rd February 2022, the NAV of Axis Small Cap Fund is at Rs 69.81. Meanwhile, the Compound Annual Growth Rate or CAGR of the company since the time of its inception is 26.92%. The current fund size of this mutual fund or its Assets Under Management (AUM) is Rs 8,178 Cr.

As it is with any small-cap fund, the volatility of Axis Small Cap Fund is very high. But so far, the fund has not fallen down to the negative side and has given high returns since its inception in 2013. Since the fund began in 2013, it has given an average annualized return of 26.92%. Let us take a look at their historical returns from different timelines.

Worth of Investment in Last 1 Lakh Investment Grown to Growth Per Centage
1 Year 1.61 Lakh 60.71 %
3 Years 2.42 Lakh 33.65%
5 Years 3.11 Lakh 25.48%
Since Inception 6.88 Lakh 26.92 %

About the Axis Small Cap Fund

The performance of Axis Small Cap Fund has been staggering over the years.

Axis Small Cap Fund Portfolio

In order to understand a mutual fund, it is important to understand where it is investing the money to bring in the profits. This we can understand by taking a look at the portfolio of a particular fund. In the case of Axis Small Cap Fund, their portfolio of the top 5 issuers is as follows:

Issuers % of Net Assets
Chemicals 17.82
IT 16.27
Industrial Manufacturing 10.66
Consumer Goods 9.52
Construction 9.46

As it is made evident, the majority of Axis Small Cap Fund money is invested in technology, chemicals, construction and healthcare sectors which are yielding positively high returns as of now.

Axis Small Cap Fund Benefits

Given the standard returns the company has given over the years is quite high. This makes many investors drawn to this fund and to know more about the benefits they can derive from it. Here are some of the benefits of investing in Axis Small Cap Fund:

The Bottom Up Approach

This fund by Axis is focused on building a portfolio on the bottom up approach. What this means is that the fund measures each and every individual company’s fundamentals instead of looking at the industry it belongs to. It is a more detailed centric approach as the fund is not merely relying on the profitable industry the company comes from but rather views it as a sole entity whose individual performance is what matters for investment purposes.

Aimed at Alpha Stocks

Axis Small Cap Fund tries to generate Alpha by diversifying its investments. Alpha is nothing but a term that refers to those funds or equity that has the ability to beat the market with their performance. This Axis fund delves deep into the market to find such funds that can outperform most of the equities in the stock market. It is their focus on Alpha that has paid so well so far because the Alpha funds are more likely to generate higher returns.

Navigating Risks

This mutual fund works by doing weighing up both risks and rewards of the companies they are investing in. They try to contain the risk by navigating highly volatile stocks and limiting the risks by stabilizing the volatility to a great extent.

Axis Small Cap Fund Benefits

The Axis fund tries to navigate the risk to mitigate their overall loss in the portfolio.

Should You Be Investing in Axis Small Cap Fund?

Now that we have charted down the trajectory of returns of Axis Small Cap Fund since the time of its inception, it is time to ask the most important question: should we invest in this mutual fund? The answer varies from investor to investor. For some, it might work wonders and for others, it is not the ideal fund to go for. So, the question we need to ask is who is this fund meant for.

Short-term Investors

If you are a short-term investor, then you might invest in this fund. Given the rate of return this Axis fund is providing and that too at such high volatility, it is better not to keep the investment horizon of more than 5 years.

High-Risk Investors

If you are willing to take high risks in investment, then the Axis Small Cap Fund is the right choice for you. Given its historical returns since the time of its inception, the fund has done really well for investors who go for high-risk investments. The fund has not suffered a loss in any year and might continue to go grow in the coming future. But as it is highly volatile, we never know when it might fall down by an even greater margin.

Final Thoughts

A fund’s historical rate of returns is a key determining factor of its performance. But if the fund is as highly volatile in nature as Axis Small Cap Fund is, it is better not to trust this performance entirely. It is better to look at other factors such as its investment portfolio, the investment approach, portfolio turnover in a year and many other things.

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