NFO Analysis: Axis Nifty 100 Index Fund
Axis Mutual Fund, one of the top 10 fund houses in India, has launched an index fund based on Nifty 100 that is known as Axis Nifty 100 Index fund. The new scheme is open for subscription from 27 September 2019 and will end on October, 11 2019. This is an index fund that will mimic Nifty 100. The other funds that are in this category are Principal Nifty 100 Equal Weight Fund and Sundaram Smart NIFTY 100 Equal Weight Fund. Nonetheless, both of them are equal weighted rather than imitating the index with same weight as in the index.
The fund has been benchmarked to Nifty 100 Index TRI and minimum application amount is Rs. 5,000.
Objective: It is an open-ended index fund that invests in equities and equity related securities of companies that form part of Nifty 100 in the same weightage. The primary objective of the scheme is to provide returns before expenses that closely correspond to the total returns of the NIFTY 100 subject to tracking errors.
Strategy: The fund is benchmarked to Nifty 100 Total Return Index (TRI) and will invest in same stocks in the same proportion as they are in Nifty 100 index. The Nifty 100 is a well diversified 100 stock index accounting for 12 sectors of the economy.
Fund Manager: The Scheme will be managed by Mr. Ashish Naik. Prior to this, he was Equity Analyst at Axis Asset Management Company and Business Analyst - Goldman Sachs India Securities. This is probably the first fund that he will be handling independently. Other funds managed by him are Axis Triple Advantage Fund (Along with Mr. R. Sivakumar), Axis Children’s Gift Fund (along with Mr. R. Sivakumar), Axis Regular Saver Fund (Along with Mr. Devang Shah), Axis Equity Hybrid Fund (along with R. Sivakumar) and Axis Hybrid Fund - Series (along with Mr. Devang Shah). It seems that the fund manager is more into debt side of the fund management.
Our Recommendation: Since the inception of Nifty 100 as index, it has been able to generate better returns than the 50-share index Nifty in the same period. The statistics below clearly shows that Nifty 100 has been a better performer than Nifty since 2003.
Even the other statistics are in favour of Nifty 100. For example, it has a higher Sharpe ratio and better drawdown than Nifty.
Detail Stats of Nifty and Nifty 100
| Stats | Nifty | Nifty 100 |
| Start | 01-01-2003 | 01-01-2003 |
| End | 30-09-2019 | 30-09-2019 |
| Total Return | 942.99% | 1061.33% |
| Daily Sharpe (Rfr = 0) | 0.75 | 0.78 |
| Daily Sortino | 1.21 | 1.25 |
| CAGR | 15.03% | 15.77% |
| Max Drawdown | -59.86% | -61.51% |
| Calmar Ratio | 0.25 | 0.26 |
| Returns | | |
| MTD | 4.09% | 4.11% |
| 3m | -2.67% | -2.26% |
| 6m | -1.29% | -1.49% |
| YTD | 5.63% | 4.53% |
| 1Y | 4.98% | 4.38% |
| 3Y (ann.) | 10.05% | 9.51% |
| 5Y (ann.) | 7.58% | 8.00% |
| 10Y (ann.) | 8.48% | 8.92% |
| Since Incep. (ann.) | 15.03% | 15.77% |
| Daily Ratios | | |
| Daily Sharpe | 0.75 | 0.78 |
| Daily Sortino | 1.21 | 1.25 |
| Daily Mean (ann.) | 16.67% | 17.32% |
| Daily Vol (ann.) | 22.24% | 22.20% |
| Daily Skew | 0.02 | -0.08 |
| Daily Kurt | 12.01 | 11.66 |
| Best Day | 17.74% | 17.28% |
| Worst Day | -12.24% | -12.23% |
| Monthly Ratios | | |
| Monthly Sharpe | 0.76 | 0.77 |
| Monthly Sortino | 1.36 | 1.38 |
| Monthly Mean (ann.) | 17.02% | 17.67% |
| Monthly Vol (ann.) | 22.54% | 22.99% |
| Monthly Skew | -0.22 | -0.21 |
| Monthly Kurt | 2.74 | 3.01 |
| Best Month | 28.07% | 29.91% |
| Worst Month | -26.41% | -26.77% |
| Yearly Ratios | | |
| Yearly Sharpe | 0.54 | 0.53 |
| Yearly Sortino | 1.17 | 1.18 |
| Yearly Mean | 16.32% | 17.06% |
| Yearly Vol | 30.33% | 31.91% |
| Yearly Skew | -0.29 | -0.18 |
| Yearly Kurt | 0.98 | 1.14 |
| Best Year | 75.76% | 82.72% |
| Worst Year | -51.79% | -53.69% |
| Drawdown | | |
| Avg. Drawdown | -3.38% | -3.32% |
| Avg. Drawdown Days | 36.41 | 35.47 |
| Avg. Up Month | 5.29% | 5.23% |
| Avg. Down Month | -4.38% | -4.66% |
| Win Year % | 81.25% | 81.25% |
| Win 12m % | 81.05% | 80.53% |
Since there is no fund available that is targeting Nifty 100, investor can think of subscribing to the issue if this scheme suits their risk profile, however, they should wait till the units of the fund is available for continuous sale and repurchase so that they could see the fund's tracking error and expense ratio.