Axis Equity Hybrid Fund Direct Growth: What to Know Before You Invest

Mutual funds have become a popular investment choice for many due to their diverse range and potential for steady returns. Among the different types of mutual funds, hybrid funds offer a blend of growth and stability. They aim to offer you the growth potential of equities and the stability of fixed-income investments by combining equity (stocks) with debt (bonds). The hybrid mutual fund reduces the volatility associated with pure equity investments. It is often an ideal choice for those who want to avoid the high volatility feature of pure equity investments. This brings us to the Axis Equity Hybrid Fund Direct Growth Plan.

Since its inception on August 9, 2018, Axis Equity Hybrid Fund Growth has shown uniform performance.

In this blog, we will walk you through the Axis Equity Hybrid Fund performance, asset allocation, and its features.

Fund Management and Objectives

The Axis Equity Hybrid Fund Direct Plan is managed by a skilled team, including Mr Jayesh Sundar, Mr Ashish Naik, Mr Devang Shah, and Mr Aditya Pagaria. Since its founding, this open-ended hybrid scheme has invested primarily in equity and equity-related instruments. If you’re aiming to add a stable yet growth-oriented option to your portfolio, this fund is worth considering. 

The Axis Bank Hybrid Mutual Fund aims to provide long-term capital appreciation.

It does this by investing in a mix of equity and related instruments, debt instruments, and money market instruments. 

The fund primarily invests in:

• Equity and Equity-Related Instruments: 65-80%
• Debt Instruments: 20-35%
• Real Estate and Cash: Minimal allocations

The equity portion focuses primarily on large-cap stocks (minimum 70%) with selective investments in mid-caps and small-caps (up to 30%).

It aims to give you a mix of growth (from stocks) and stability (from bonds). 

This makes it a good choice for those who want to balance risk and reward.

• It’s a balanced fund that invests in both stocks and bonds.
• It focuses mostly on stocks (65-80%), with some bonds (20-35%).
• It’s considered an aggressive hybrid fund because it invests more in stocks than bonds.

Stock Focus

The Axis Equity Hybrid Fund mainly invests in large-cap companies but also has some mid and small-cap (growing companies) investments.

Bond Focus

The Axis  Bank Hybrid Mutual Fund invests in government bonds and corporate bonds with a target duration of 1-7 years.

Why Choose This Fund?

You get the chance to see your equity hybrid fund grow in the stock market while enjoying the added stability of bonds.

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Performance and Returns

The Axis Equity Hybrid Fund Growth has shown impressive results since its inception. 

As of August 29, 2024, the Axis Equity Hybrid Fund Growth NAV for the growth option is ₹22.0600. Over the past year, it has achieved a notable CAGR of 28.63%. The fund has also shown strong performance over longer periods, with a CAGR of 17.32% over the past 2 years and 11.97% over the past 3 years. These results outperform the average growth rates of similar funds in its category.

As of the latest update, the fund manages assets worth ₹1683 Crore. 

Investment Allocation

76.5% of the axis equity hybrid fund portfolio is invested in stocks, making it the largest component. Additionally, 21.72% of the portfolio is allocated to debt instruments. A smaller portion, 1.79%, is invested in real estate, providing some exposure to the property market. 

The Axis Equity Hybrid Fund Direct Growth has diversified its holdings across various sectors.

1. Financial: The fund allocates 21.93% to the financial sector. This is higher than the category average of 19.3%.

• Technology: 12.13% of the fund is invested in technology. This part of Axis Equity Hybrid Fund portfolio is above the category average of 10.91%.
• Materials: The fund has 8.59% in materials, which is higher than the category average of 6.41%.
• Consumer Discretionary: 8.04% focuses on non-essential consumer goods and services.
• Industrials: The fund holds 7.84% in industrials.
• Energy & Utilities: 6.64% is allocated to energy and utilities, closely aligning with the category average of 6.59%.
• Healthcare: With 6.47% in healthcare, the fund exceeds the category average of 4.91%.

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• Consumer Staples: The fund has a 3.66% allocation in consumer staples.
• Real Estate: The fund allocates 1.2% to real estate.

The average market capitalization of the companies in this portfolio is ₹2,22,240 Cr.

The fund holds 70 different stocks, with the top 10 stocks comprising 34.83% of the equity portfolio.

The fund’s asset allocation as of now is as follows:

• Equity: 76.5%
• Debt: 21.72%
• Real Estate: 1.79%
• Cash & Cash Equivalents: -0.01%

This allocation provides a robust mix of growth-oriented equity and stable debt investments.

Features at a Glance

• Type: Open-Ended Aggressive Hybrid Fund
• Benchmark: CRISIL Hybrid 35+65 – Aggressive Index
• Exit Load:
  • Nil for redemption/switch-out after 12 months.
  • 1% for the portion of investments redeemed/switch-out within 12 months.

Risk and Volatility

The Axis Equity Hybrid Fund is considered very high risk. This is mainly because it invests a large portion of its money in stocks, especially in large and mid-sized companies. This can have unpredictable price changes. Although the fund also invests in bonds to add some stability, these bonds have long maturities. This makes them sensitive to interest rate changes and adds to the overall risk.

Here is the axis equity hybrid fund performance in terms of its risk profile:

• Mean Return: 12.80% 

This is the average return the fund has delivered.

• Standard Deviation: 11.05% 

This shows how much the fund’s returns can vary from the average. A higher number means more fluctuations.

• Sharpe Ratio: 0.66% 

This measures the fund’s return compared to its risk. A higher ratio indicates better risk-adjusted returns.

• Sortino Ratio: 1.28 

This focuses on the fund’s returns in relation to negative risk. A higher ratio means better performance during downturns.

• Beta: 0.90 

This shows how much the fund’s returns move in relation to the market. A beta less than 1 means the fund is less volatile than the market.

• Alpha: -2.15 

This indicates how much the fund’s performance differs from what was expected based on its risk level.  A negative alpha means the fund has underperformed compared to its risk level.

Taxation

As an aggressive allocation mutual fund, the Axis Equity Hybrid Fund Direct Growth taxation rules are as follows:

• Short-Term Capital Gains (STCG): If you hold the fund for less than a year, any capital gains will be taxed at 15%.
• Long-Term Capital Gains (LTCG): If you hold the fund for more than a year, capital gains will be taxed at 10%, without the benefit of indexation (which typically adjusts the purchase price for inflation). 

However, gains up to ₹1 lakh are exempt from taxation annually if held for more than 12 months.

Minimum Investment and Lock-in Period

Thinking about investing in the Axis Equity Hybrid Fund Direct Growth? 

Here’s what you need to know:

• Minimum Investment: ₹500 for lump sum payments and ₹100 for SIP (Systematic Investment Plan).
• Lock-in Period: None. You can invest with flexibility and access your funds without any lock-in restrictions.

Start investing in Axis Equity Hybrid Fund Direct Growth with a free demat account!

How to Invest in Axis Mutual Funds

Interested in investing in the Axis Equity Hybrid Fund Direct Growth Plan?

Here’s how you can get started with Shoonya:

Investing in Lump Sum Mutual Funds Through the Shoonya Web Platform

Here’s a quick guide on how to invest in lump sum axis equity hybrid fund growth through the Shoonya web platform:

1. First, you must log in to your Shoonya account at trade.shoonya.com. From the “Orders” section, click on “MF order.”
2. Search for the fund you wish to invest in; in this case, axis equity hybrid fund growth.
3. Choose “Fresh” for a new investment and enter the amount you want to invest.
4. You can complete your purchase by clicking the “Purchase” button.
5. A payment link will be sent to your registered email. Use the link to make the payment.
   

After payment, your mutual fund units will be allotted to your Demat account within T+2 days.

Note: You can only make the payment using the bank account registered with your Demat account.

Setting Up an SIP for Mutual Funds

If you prefer a Systematic Investment Plan (SIP) for axis equity hybrid fund growth  you must follow these steps:

1. First, you need to log in to your Shoonya account at trade.shoonya.com. Go to “Orders” and click on “XSIP.”
2. You must search the mutual fund for which you want to set up an SIP. In this case, select Axis Bluechip Fund Direct Growth.
3. If this is your first SIP with Shoonya, you need to create a Mandate ID. Enter the mandate amount and the validity date (until you want to keep your SIP active).
4. You must submit the details, and you’ll receive a Mandate authentication link via email. Approval generally takes 24 hours.

Once your Mandate is approved, you can follow these steps to set up your SIP:

1. Go to “XSIP,” enter the SIP amount, and select “Fresh” as the transaction type.
2. Choose the date when the SIP will be debited directly from your registered bank.
3. The approved Mandate ID will auto-reflect.
4. Choose “Monthly” for monthly debits and specify the number of instalments (e.g., 24 instalments for a 2-year SIP).
5. This process will help you invest systematically with ease.

What is an Equity Hybrid Fund?

An equity hybrid fund combines investments in both equity (stocks) and debt (bonds). It aims to balance the growth potential of equities with the stability of debt. This specific USP makes it suitable for many.

Also known as an aggressive hybrid fund, this mutual fund offers a balanced investment strategy. Most of these funds invest 65% to 80% of their assets in stocks, aiming for high growth.

Whereas, 20% to 35% of their portfolio is invested in bonds..

It’s a great option for those who want to take advantage of the stock market’s growth but still prefer some level of safety and consistency. 

Benefits of Investing in an Equity Hybrid Fund

If you’re looking for a way to get equity exposure with less risk than a pure equity fund, an aggressive hybrid fund might be just right for you.

Here is what it has to offer:

• Diversification: It balances risk by investing in both equities and debt instruments.
• Growth and Stability: These funds provide the potential for capital growth while offering income and stability.
• Flexibility: The hybrid equity fund allows for adjustments in allocation based on market conditions.
• Professional Management: The fund is managed by experts who adjust the fund’s allocation to manage risk.

Things to Know Before Investing in Axis Equity Hybrid Fund Direct Plan

Here are a certain things you must keep in mind before investing in the Axis bank hybrid fund.

• The fund is designed for medium to long-term investors.
• It offers flexibility with a low minimum investment of ₹500.
• The Axis Equity Hybrid Fund Direct growth has no lock-in period.

However, you must take into account the tax implications and market conditions when making withdrawals.

Conclusion

The Axis Equity Hybrid Fund Direct Plan is indeed an attractive choice for investors looking for a balanced approach. With its diversified portfolio, strong performance history, and flexible investment options, it can be a valuable addition to your investment strategy.

FAQs | Axis Equity Hybrid Fund Direct Plan

Source: ValueResearch

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Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.