Axis Global Innovation Fund of Fund NFO – Review
Axis Mutual Fund is planning to launch Global Innovation Fund of Fund (FoF) that would open for subscription on May 10, 2021. This fund of funds would invest in Schroder International Selection Fund Global Disruption, an existing equity fund that delivered 33% annualised returns since inception of 2+ years. Even during covid-19 crisis, the underlying existing fund has delivered good returns. Should you subscribe to Axis Global Innovation Fund of Fund NFO?
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What is this Disruption Fund?
Since Axis Global Innovation FoF has invested in underlying funds that invests in companies based on disruption theme, let us check what exactly that means. You can skip this section, if you are already aware of it.
The underlying fund invests at least two-thirds of its assets in equity and equity related securities of companies worldwide. Disruption typically means innovation (whether due to technology or otherwise) which changes a particular industry by creating new markets, products or service models.
Disruption can be observed in many industries such as e-commerce, media & communications and banking & payments. The fund manager believes that companies benefitting from disruptive innovation, either as the disruptor or otherwise, can experience a rapid acceleration in, and durability of, growth. The manager seeks to invest in companies benefiting from disruption before this is fully reflected in market expectations.
Axis Global Innovation Fund of Fund [NFO] Issue Details
This new fund offer opens for subscription on Monday, May 10, 2021 and closes on Friday, May 17, 2021.
| Scheme Opens | 10-May-21 |
| Scheme Closes | 21-May-21 |
| Scheme reopens for continuous purchase/sale | Within 5 days after allotment |
| 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 | For < 1 year – For 10% of investment: Nil For remaining investment: 1% For > 1 year – Nil |
| Risk | Very High Risk |
| Max expense Ratio (TER) | 2.25% |
| Benchmark | MSCI AC World (Net TR) |
Axis Global Innovation Fund of Fund SID
What is the investment objective of this MF scheme?
To provide long term capital appreciation by predominantly investing in units of Schroder International Selection Fund Global Disruption, an equity fund that aims to provide capital growth by investing companies worldwide which benefit from disruption and to 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.
What is the allocation pattern in this mutual fund?
This fund investment pattern is as follows:
| Type of instruments | Min % | Max % | Risk Profile |
|---|---|---|---|
| Units / shares of Schroder International Selection Fund Global Disruption Index | 95% | 100% | Medium to High |
| Debt and Money Market instruments | 0% | 5% | Low to Medium |
Where does the underlying fund invests?
Schroder International Selection Fund Global Disruption (underlying fund) is currently investing in the following top stocks /sectors / countries.
Why to invest in the Axis Global Innovation Fund of Fund NFO?
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 in the last 2 years. This fund delivered 33% annualised returns in 2 years-3 months and 66% returns in last 1 year.
2) Investing in international funds would help in diversification as well as access to international markets.
3) 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) International funds might not react to the Indian financial markets. If SENSEX/NIFTY is going up due to bull run, you might not see that in global funds.
2) Since this is global fund, there are currency risks and geopolitical risks.
3) While this fund delivered amazing returns in the last 2 years. However, there is no guarantee that it would deliver similar performance in future.
4) You can refer complete risk factors of investing in this particular scheme in SID / KIM / NFO prospectus.
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Performance of existing underlying fund
Let me provide you underlying fund performance (Schroder International Selection Fund Global Disruption) since inception of Dec-2018 onwards.
Should you invest in Axis Global Innovation Fund of Fund NFO?
Axis Global Innovation Fund NFO invests in another existing fund outside India that invests across North America, Continental Europe and other emerging markets. Bull run or bearish stock markets in Indian economy would not have a major impact of such funds as they don’t invest in Indian equities. Investing in international or global funds are high risk. This fund invests in an existing mutual fund where such fund past performance is known for over 2 years. Currently the global economies are in bull run even during this covid-19 crisis. High risk investors can invest in 3-4 lots instead of lump sum as global stock markets are at peak. Moderate to low risk takers can stay away from such funds.
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It’s a very good & informative analysis of the NFO. It would certainly help an investor to take decision about this NFO. Thanks.
One more analytical view by you sir…
It’s wonderful…
I would like to diversify my investment… so, I will participate in it…