Axis Special Situations Fund NFO Review

Axis Special Situations Fund NFO – Is there something special?

Axis Special Situations Fund NFO ReviewAxis Special Situations Fund NFO – Is there something special?

Axis Mutual Funds is planning to launch the Special Situations Fund. This new fund offer would open for subscription on 4th December 2020. This is an open ended equity scheme that follows special situations theme and invests in opportunities that arises during regulatory changes, government policy changes, corporate restructuring, technology led disruption and innovation etc. Is it something special that creates value to an investor’s portfolio? Should you invest in Axis Special Situations Fund NFO? What are the various risk factors associated with such funds?

Also Read: Motilal Oswal 5 Year G-Sec ETF – Should you invest?

Axis Special Situations Fund (NFO) Issue Details

Here are the NFO details.

Axis Special Situations – NFO Issue Details
Scheme Opens 04-Dec-20
Scheme Closes 18-Dec-20
Scheme reopens for continous purchase/sale 24-Dec-20
Minimum investment (Lumpsump) Rs 5,000
Minimum investment (SIP) Rs 500 for 6 months
NAV of the fund Rs 10 during NFO period
Entry Load Nil
Exit Load 1% load – If 90% of portfolio redeemed within 1 year
Risk High Risk
Max Total expense Ratio (TER) 2.25%
Benchmark NIFTY 500 TRI
Fund Manager Mr. Ashish Naik (equity)
Mr. Hitesh Das (Foreign Securities)

Download Axis Special Situations Fund SID

What is the investment objective of this MF scheme?

To generate long-term capital appreciation by investing in mis-priced stocks facing special situations. The mis-pricing 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.

There is no assurance or guarantee that the investment objective of the scheme will be realized.

What is the allocation pattern in this mutual fund?

This fund investment pattern is as follows:

Type of instruments Min % Max % Risk Profile
Equity & Equity related instruments of special situations theme 80% 100% High
Other Equity and Equity related instruments 0% 20% High
Debt & Money Market Instruments 0% 20% Low to Medium
Units issued by REITs & InvITs 0% 10% Medium to High

Why to invest in the Axis Special Situations Fund?

Here are a few reasons to invest in such mutual fund schemes.

1) The MF invests in opportunities that arises during regulatory changes, government policy changes, corporate restructuring, technology led disruption and innovation etc. There is no other category of mutual funds to tap such opportunities.

2) This fund also aims to tap such special opportunities that are existing post covid-19 as there are no restrictions either on market cap nor sector.

3) These funds invests in special situations which can benefit in the long term. There is good potential for wealth creation in the longer term.

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) It invests in special opportunities that may arise during specific events of the companies. This would limit the capability of the fund to invest in other themes / sectors.

2) It invests based on a special situations theme where such situations could be high in one period and lower in another period. The returns could highly fluctuate.

3) Since this scheme invests in specific opportunities for companies in  special situations, hence concentration risk is very high.

4) It invests in REITS and InvITs which are considered as high risk.

5) You can refer complete risk factors of investing in this particular.

Performance of existing Special Situations Funds

There were a few of the funds which were special opportunities that got merged / categorized to other category post SEBI recategorization of funds in 2018. There is only Aditya Birla Sun Life Special Opportunities Fund that came 1.5 months back and gave 9.6% returns. This is abnormal due to bullish markets.

You may like: Can we expect 9% annualised returns from Baroda Banking and PSU Bond Fund?

Axis Special Situations Fund – Should you invest?

Axis Special Situations Fund invests based on a special situations theme. These opportunities may be high post covid-19 and there could be a limited number of opportunities in future. The returns can significantly fluctuate year on year. High risk investors who are willing to invest for at least 5 years tenure can invest in such funds. Alternative, one can invest in some of the top performing Special Situations Funds indicated above. Moderate to low risk takers should stay away from such funds.

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Suresh KP

4 thoughts on “Axis Special Situations Fund NFO – Is there something special?”

  1. Suresh,
    Where will this fund invest if there is no special situation for say 6 months? Will they keep cash and wait for special situation to come?

    1. Hello Pradeep, There are tons of opportunities. However assume there are no specific transactions, they can continue holding previous investments (in specific companies which they have already invested) or hold them in cash (which is very rare case). It is not that they would sell existing investments and wait for the new special situations opportunities.

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