NFO Update: Axis Special Situations Fund
Axis Mutual Fund, which launched its first scheme in October 2009, is now launching its fifty-fourth scheme now. With an asset under management (AUM) of about Rs 1.56 lakh crore as of September 30, 2020, it has announced the launch of its newly open-ended equity scheme, Axis Special Situations Fund.
The new fund offer (NFO) opens for subscription on December 4, 2020, and closes on December 18, 2020. This fund falls under the thematic category.
Objective: It is an open-ended equity scheme that would invest in mispriced stocks facing special situations. The mispricing of stocks can occur due to companies facing special situations like regulatory/policy changes, management restructuring, technology-led disruption, and innovation, or any temporary challenges in the operating environment. The investment objective of the fund will be to generate long-term capital appreciation.
Strategy: Axis Special Situation fund is a multi-faceted, multi-cap, and multi-sector fund. It will invest 70 per cent of the corpus in disruptive companies, of which, around 20-30 per cent will be invested in global disruptors. Overseas investments will be advised by Schroders International Plc, which is a part of the JV that owns Axis Asset Management Company Limited.
The core investment theme of Axis Special Situation Fund is disruption. Disruption in business can refer to innovation that creates a new market, sectoral shifts, changes in consumer behaviour, and more.
The scheme retains the flexibility to invest across all the securities in the equity, debt, money markets instruments, and units issued by REITs & InvITs along with mutual fund units but not in credit default swaps.
Conclusion: There are many special situation funds that are already available in the Indian market. However, most of them are different from the current offering. Hence, there is no fund with which we can compare this fund. The performance of the fund will very much depend upon the fund manager’s ability to identify such an opportunity. Looking at the performance of Schroder’s other funds with the same theme; it has been able to beat its benchmark. Nonetheless, our advice will be to wait for a while and check the performance of the fund for a year or so, and only then, commit to this fund.