Axis MF Launches Quant Fund NFO Review – Should you Subscribe

Axis MF Launches Quant Fund NFO – Should you Subscribe?

Axis MF Launches Quant Fund NFO Review – Should you SubscribeAxis MF Launches Quant Fund NFO – Should you Subscribe?

Axis Mutual Funds has launched a new fund offer, Axis Quant Fund NFO that would open for subscription on 11th June, 2021. This is an open-ended mutual fund scheme that follows the quantitative model. Quantitative model in simple terms is nothing but selecting the stocks based on fundamental approach + rule-based criteria.  The quantitative investing model aims to reduce fund Manager bias in the mutual fund selection process. Should you invest in the Axis Quant Fund NFO? How do quant based mutual funds performed in the recent past?

Also Read: BOI Axa Blue Chip Fund NFO opens on 8th June, 2021 – Should you opt?

Axis Quant Fund NFO Details

Axis Quant Fund NFO would open for subscription on Friday, 11th June, 2021 and closes on Monday, 25th June, 2021. This is an open-ended mutual fund scheme. Here are the NFO issue details.

Scheme Opens 11-Jun-21
Scheme Closes 25-Jun-21
Scheme reopens for continuous purchase/sale After 5 working days from closure
Minimum Lumpsum Rs 5,000
Minimum SIP Rs 1,000 for 6 months
NAV of the fund Rs 10 during NFO period
Entry Load Nil
Exit Load Redemption beyond  10% – < 1 year – 1%
Risk Very High Risk
Max expense Ratio (TER) 2.25%
Benchmark S&P BSE 200 TRI

Axis Quant Fund NFO SID

What is the investment objective of Axis Quant Fund NFO?

To generate long-term capital appreciation by investing primarily in equity and equity related instruments selected based on a quantitative model.

However, there can be no assurance or guarantee that the investment objective of the scheme would be achieved.

What is Axis Quantitative Model Theme?

You can skip this section if you are already aware of the model theme.

This fund would invest based on Q-GARP approach. The section of portfolio would be based on Quality Stocks with a Good but at A Reasonable Price (QGARP).

This fund would invest based on fundamental factors as well as technical factors.

1) Fundamental Factors:

The model will look at various fundamental factors like:

Return on Equity

Sales growth

Cash flow

Debt to equity ratio

Earnings growth

Price to book

Price to earnings

Dividend yield

Earnings yield

2) Technical Factors:

It considers various technical factors like:

Liquidity

Stock price momentum

Volatility

Historical performance

What is the allocation pattern in this mutual fund scheme?

This fund investment pattern is as follows:

Type of instruments Min % Max % Risk Profile
Equity & Equity related instruments of selected companies based on a quantitative model 80% 100% High
Other Equity and Equity related instruments 0% 20% High
Debt and Money Market instruments 0% 20% Low to Medium
Units issued by REITs and InvITs 0% 10% Medium to High

Why to invest in the Axis Quant Fund NFO?

Here are a few reasons to invest in this fund.

1) This fund invests based on the quantitative model theme which considers both fundamental and rule-based criteria. This strategy would help investors to diversify their portfolio of mutual funds through novel approach of investing.

2) This fund invests in unique proposition of a fundamentally driven quantitative approach that has diversified portfolio across sectors and across market caps which aims to outperform across market cycles.

Major risk factors you should consider before investing in such funds

One should consider some of these risk factors / negative factors before investing.

1) Axis quant fund investment strategies are rule-based factors which would be based on medium to long term. Such rule-based approach may not always work.

2) This fund invests up to 20% in debt instruments which are turned to be high risk these days.

3) This fund invests up to 10% in REITs and InvITs which are high risk.

How is the past performance of Quant theme based mutual funds?

Here is the performance of mutual funds which are investing based on this quantitative model theme. Returns more than 1 year are annualised.

Fund Name 1 Year 5 Years 10 Years
Nippon India Quant Fund 53.1% 13.6% 10.5%
DSP Quant Fund 53.2%
Tata Quant Fund 35.8%

Should you invest in the Axis Quant Fund NFO?

Axis Quant Fund invests based on a quantitative model theme, i.e., fundamental factors with rule based. There was flood of new funds with this concept in the recent 1 year. There is only 1 fund which is existing in the long term of 10 years and this fund gave 10.5% annualized returns. These quant theme-based funds can provide moderate returns in the medium to long term. High risk investors can invest in such funds considering this aspect. Alternatively, one can look for some of the thematic mutual funds which has outperformed in the recent past.

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Suresh KP

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