Axis Global Equity Alpha Fund of Fund (FoF) invests in existing fund that delivered 22% returns in 1 year – Should you invest?
Axis Global Equity Alpha Fund of Fund (FoF) – Review
Axis Mutual Fund is planning to launch Equity Alpha Fund of Fund (FoF) that would open for subscription on September 4, 2020. This fund of funds would invest in Schroder International Selection Fund Global Equity Alpha, an existing equity fund that delivered 11% to 22% returns in the last 1 to 5 years. Even during covid-19 crisis, the underlying existing fund has delivered good returns. This would tempt investors to invest in such funds. In this article we would provide Axis Global Equity Alpha Fund of Fund NFO issue details and whether there are any risk factors of investing in such international mutual fund schemes.
Issue details of Axis Global Equity Alpha Fund of Fund (NFO)
This is an open-ended equity mutual fund scheme.
This scheme would open for subscription on September 4, 2020
This scheme would close for subscription on September 18, 2020
Since this is an open ended scheme, it would again open for subscription after 5 days from the closure of NFO.
This scheme is available in both regular and direct plans.
This plan offers both growth option and dividend option.
This scheme is available for lump sum and SIP investment.
Minimum investment is Rs 5,000 and in multiples of Rs 1 there-off for lump sum investments.
Minimum investment is Rs 1,000 per month for monthly SIP and for a tenure of 6 months.
The NAV of the fund is Rs 10 per unit during the NFO initial subscription.
There is no entry load to invest in this fund.
There is an exit load of 1% if you redeem more than 10% of MF units within 1 year.
This scheme is classified as HIGH RISK scheme.
Scheme total expense ratio (TER) is estimated at a maximum of 2.25%.
What is the investment objective of this MF scheme?
To provide long term capital appreciation by predominantly investing in Schroder International Selection Fund Global Equity Alpha, a fund that aims to provide capital growth by investing in equity and equity related securities of companies worldwide. The Scheme may also invest a part of corpus in debt, money market instruments and / or units of liquid schemes in order to meet liquidity requirements from time to time.
There is no assurance or guarantee that the investment objective of the scheme will be realized.
Who is eligible to invest in this mutual fund scheme?
The following can invest in this scheme.
1) Indian resident adult individuals, either singly or jointly.
2) Minors through Parents/Lawful Guardian.
3) Hindu Undivided Family (HUF) through its Karta.
4) Partnership Firms in the name of any one of the partners.
5) Proprietorship in the name of the sole proprietor.
6) Companies, Societies etc.
8) Non-Resident Indians (NRIs) / Persons of Indian Origin (PIO) on full repatriation basis or on non-repatriation basis;
Complete list of eligible participants who can invest can be checked in the NFO prospectus.
Who is the Fund Manager of Axis Global Equity Alpha Fund of Fund?
Here are the fund manager’s details.
Mr. Hitesh Das – Foreign Securities
Mr. R. Sivakumar – Debt portion
What is the benchmark for this scheme?
The benchmark for this scheme is MSCI World (Net TR).
What is the allocation pattern in this mutual fund?
This fund investment pattern is as follows:
1) It invests 95% to 100% of investment in Units / shares of Schroder International Selection Fund Global Equity Alpha. The risk profile in this segment is medium to high.
2) It would invest 0% to 5% in debt, money market instruments and / or units of liquid schemes. The risk profile in this segment is low to medium.
Why to invest in the Axis Global Equity Alpha Fund of Fund?
Here are a few reasons to invest in such debt funds.
1) It is investing in existing international mutual fund scheme that has performed well, hence in reality one can assume that they are investing in existing mutual fund scheme.
2) Investing in global funds would help in diversification instead of investing only in Indian stocks.
3) Investing in international funds would help in getting access to international markets.
4) This fund invests majorly in equity of international markets. Since they do not invest in domestic equities, these are classified like debt funds for taxation purpose. One can benefit from low tax rates.
Some key risk factors you should consider before you invest in such funds
One should consider some of these risk factors / negative factors before investing.
1) Global funds might not react to Indian stock markets. If SENSEX/NIFTY is going up due to bull run, you might not see that in global funds.
2) There is currency risk if you invest in global funds as the mutual fund scheme invests outside India and there can be fluctuations in conversion rates.
3) The political situation of the country where the fund is investing would have a impact on the fund performance.
4) You can refer complete risk factors of investing in this particular scheme in SID / KIM / NFO prospectus.
Performance of existing underlying fund
Since this fund would invest in another global fund which is already existing, let us look at the fund performance and comparison with benchmark.
Should you invest in Axis Global Equity Alpha Fund of Fund NFO?
Axis Global Equity Alpha Fund of Fund invests in another fund outside India that invests globally. One should understand that bull run or bearish Indian economy would not have any impact to these funds as they don’t invest in Indian equities. Investing in international or global funds is high risk. This fund would invest in an underlying existing mutual fund where such fund past performance is known and reasonably good. Currently the global economies are reviving post covid-19 crisis. High risk investors can invest in such global mutual funds. Moderate to low risk takers can stay away from such funds.
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