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Fund Manager Insight : Jinesh Gopani, Fund Manager, Axis Mutual Fund
June 3, 2015

Jinesh Gopani answers our questions on Axis Long Term Equity Fund.

Author : iFAST Research Team

Fund Manager Insight : Dhawal Dalal, DSP BlackRock Mutual Fund


"The best performing ELSS on our platform, Axis Long Term Equity Fund has become the first recall when investors think of tax saving funds. We interacted with Jinesh Gopani, the Fund Manager, to know the strategies that he has been following which has led to the fund's outperformance across time periods. "

Jinesh Gopani

Jinesh Gopani, Fund Manager - Equity, Axis Mutual Fund

Q. In April 2011, you started managing Axis Long Term Equity Fund along with Mr.Chandresh Nigam.However, in January 2013, you became the sole fund manager and in this context, could you briefly tell us about the changes made in the fund since then

A. The fund's investment philosophy is centred on four pillars viz., fundamental research, pricing power, strong management teams & risk management. Within the fast growing industries, it targets companies with pricing power, cost advantages, sustainable competitive advantages, innovative products or services and ability of the business model to generate steady free cash flows over a longer period of time.

The fund endeavors to buy and hold high growth secular businesses run by dynamic management with utmost integrity. We have been consistent with this philosophy since day one. So, as the companies deliver performance year after year, few of them would have either got added or their sizes would have got increased in the fund while a few companies would have been exited that couldn't meet our expectations.

Q.Axis Long Term Equity Fund is positioned on these lines; "Focus on bottom up stock picking of stocks which has sound business models, pricing power, quality management and have consistently created long term wealth for its shareholders". Can you give an example of a few stock picks which have followed this mandate in the true sense?

A. With a medium to long term view towards capturing growth, the fund is biased towards the stocks which can deliver superior returns. This includes private sector banks, autos, auto ancillary, housing & consumption sector etc. The fund also includes bottom-up stock selection ideas in Pharma, IT and defence sectors. The fund has avoided highly cyclical stories and highly regulated sectors.

In our current portfolio, barring few cases/stocks most of the stories make the grade. This is best said by the longevity of the stocks held in our portfolio.

Q. The fund is classified in the multi cap space with a flexibility to take a 50% exposure into mid caps. However, over the years, we have not seen an aggressive allocation into the mid cap segment. Any reason for not using this mandate to go aggressively into midcaps, especially when there is so much of optimism in the market.

A. The fund looks for opportunities across market capitalization while maintaining a balance between large, mid and smallcap allocations within the portfolio. If risk reward is favorable we would definitely be aggressive in buying any story irrespective of its market cap. However, given the rising risk in the midcap space and the increase in the valuation gap between the large caps and the midcaps, with an eye on liquidity of stocks and valuations, we try to maintain healthy mix among large, mid and small cap stocks.

Q. A commendable feature of this fund has been that as on March 2015, ~ 50% of the stocks in the portfolio have been held continuously for 36 months (April 2012-March 2015).A return attribution analysis done for this time period shows that Eicher Motors, Symphony and Kotak Mahindra Bank have been the biggest contributors to the performance of this fund. What was the reason behind including these stocks in the portfolio?

A. As our philosophy is to buy strong secular high growth businesses delivering decent cash flows, we are always in search of companies which can deliver superior returns to our investor. And the above mentioned stocks are the examples of such success stories.

Q. At any point in time, while managing this fund, did you pick up any stocks in which your conviction didn't work; as a result, you had to exit out of the same.

A. Our stock selection strategy is completely research based and it is armored with proper checks and balances to ensure its fit in our portfolio construct. Although there have been a few cases where certain stocks have not met our expectations and we have been lucky enough to exit them at the right time.

Q. Today, Axis Long Term Equity Fund and Jinesh Gopani have become synonymous in the mutual funds industry. Can you give us three reasons for this fund becoming the first recall when investors think of tax saving instruments?

A. • Deliver risk adjusted returns - as it's a third party's money

• No compromise on quality

• Long term approach rather than short term churns

iFAST and/or its content and research team's licensed representatives may own or have positions in the mutual funds of any of the Asset Management Company mentioned or referred to in the article, and may from time to time add or dispose of, or be materially interested in any such. This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any mutual fund. No investment decision should be taken without first viewing a mutual fund's offer document/scheme additional information/scheme information document. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Investors should seek for professional investment, tax, and legal advice before making an investment or any other decision. Past performance and any forecast is not necessarily indicative of the future or likely performance of the mutual fund. The value of mutual funds and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice.
Mutual Fund investments are subject to market risks. Please read all scheme related documents carefully.

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