Axis Banking & PSU Debt Fund - An Open Ended Debt Scheme Predominantly Investing In Debt Instruments Of Banks, Public Sector Undertakings & ...
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Axis Banking & PSU Debt Fund
(An Open Ended Debt Scheme Predominantly Investing In Debt Instruments Of Banks,
Public Sector Undertakings & Public Financial Institutions)Axis Banking & PSU Debt Fund
Strategy Snapshot
The Axis Banking & PSU Debt fund as the name suggests invests predominantly in fixed income instruments of
banking companies and public sector entities
Rating profile of the portfolio is 100% AAA
Currently, The fund follows a buy and hold approach with the intention of holding bonds till maturity (Roll Down
Strategy)
Given the falling interest rates scenario and the steepness in the 2-3 year space, the portfolio aims to capture
opportunities arising from the compression of spreads and a normalizing yield curve
Currently, the average maturity of the fund stands at 2.1 years
Allocation & maturity is based on the current market conditions and is subject to changes depending on the fund manager’s view of the markets. Please refer to Scheme Information Document
(SID) for detailed asset allocation and investment strategy. Data as on 30th June 2020
2Playing The Macro Trend
How Has The Strategy Played Out So Far
Buy and hold strategy amidst turbulent market
conditions to protect against downside risks • Late 2018: Flat AAA corporate curve with spreads
at multi year high - Indicative of economic stress
100 4.0
3.5
95
3.0 • Early 2019: Economic sentiment sees flagging.
90 2.5 RBI resorts to dovish monetary policy and flushes
2.0 system with liquidity
85 1.5
1.0
80
0.5 • Mid 2019: Credit contagion affects credits. Flight
75 0.0 to safety pushes AAA asset yields materially
downward
Feb-19
Feb-20
Nov-18
Dec-18
Apr-19
Aug-19
Oct-19
Jul-19
Nov-19
Dec-19
Apr-20
May-19
Sep-19
May-20
Jan-19
Mar-19
Jun-19
Jan-20
Mar-20
Jun-20
AAA Cash & Cash Equivalent • Mid 2020: Exposure to low risk fixed income AAA
Money Market Instruments Government Securities instruments protects investors against credit risk.
Average Maturity
Source: Axis AMC Internal Analysis. Period: October 2018 to June 2020. Past performance may or may not be sustained in the future. Allocation & maturity is based on the current market
conditions and is subject to changes depending on the fund manager’s view of the markets. Please refer to Scheme Information Document (SID) for detailed asset allocation and investment
strategy.Portfolio Construction
Emphasis on Consistency
Credit
Duration
Alpha Analysis
and Yield
& Investment
Contributors Curve
Universe
Security
Selection
and
Weighting
Mandate
Risk and Risk
Control Investment Management
Policy
Strategy followed is based on the current market conditions and is subject to changes depending on the fund manager’s view of the markets.
4Portfolio Construction
Discipline is the key
Diversification Credit play different Valuation
from duration play
• Cautious at selecting • Pure ‘carry’ play with buy • Look at credit exposure
sectors and hold approach only during favorable
valuation scenario
• Diversifying the exposure • No active duration call in
to manage potential risk lower rated papers
• Strict issuer/ rating limits
Strategy followed is based on the current market conditions and is subject to changes depending on the fund manager’s view of the markets.
5Risk Management
• Tight Duration Range (3 years)
• Stringent credit review
• Control credit risk through diversification and strict limits on issuer weighting based on rating
Risk Mitigation Framework
Sector Credit Diversification Duration Liquidity
• Controlled through • Focus on High • Exposure to each • Strictly adhere to • Liquidity/impact cost
diversification and Quality Issuer issuer limited by its duration limits part of security
stringent review of rating specified by the selection/portfolio
investable sectors; • Investment universe investment mandate construction.
based on credit & investment policy
• Regulatory limits on research Optimize balance of
sector Exposure credit quality, returns
and liquidity
Strategy followed is based on the current market conditions and is subject to changes depending on the fund manager’s view of the markets.
6Portfolio Characteristics
30th June 2020
Roll Down Strategy aimed
High quality & low-risk Ideal for investors with a 1-3
ast locking in medium term
strategy year investment horizon
rates
Portfolio Characteristics Average for the last 1 year
Average Maturity 2.1 years
Allocation to High Rated Papers# 92%
Macaulay Duration 2 years
Allocation to G-Sec 10%
Modified Duration 1.9 years
Yield to Maturity^ 5.00%
Allocation & maturity is based on the current market conditions and is subject to changes depending on the fund manager’s view of the markets. ^The yield to maturity given above is based on the
portfolio of funds as on date given above. This should not be taken as an indication of the returns that maybe generated by the fund and the securities bought by the fund may or may not be held
till their respective maturities. The calculation is based on the invested corpus. #High Rated Papers refers to instruments which are rated AAA/A1+ & equivalent or G-sec.
7Performance
30th June 2020
1 Year 3 Year 5 Year Since Inception
Current Current Current
Current
Value of Value of Value of
CAGR Value of CAGR CAGR CAGR
Inception investment investment investment
(%) investment (%) (%) (%)
of of Rs. of Rs.
of Rs. 10,000
Rs.10,000 10,000 10,000
Axis Banking & PSU Debt Fund - Direct 11.72% 11,172 9.20% 13,025 8.77% 15,229 8.87% 19,851
Plan - Growth
NIFTY Banking & PSU Debt Index 8-Jun-12 11.66% 11,166 7.91% 12,569 8.31% 14,909 8.70% 19,595
(Benchmark)
NIFTY 1 Year T-Bill Index (Additional 8.03% 10,803 7.39% 12,388 7.40% 14,298 7.59% 18,046
Benchmark)
Past performance may or may not be sustained in future. Different plans have different expense structure. Aditya Pagaria is managing the scheme since 13th August 2016. Aditya manages 8
schemes at Axis Mutual Fund. Returns greater than 1 year are Compounded Annual Growth Rates (CAGR). Face Value per unit is Rs 1,000. Please refer to annexure for all schemes managed by
the fund manager.
Refer slide 21 for disclaimer. 8Fixed Income Market Update
9India is Getting Back to Work
Largely Led by Semi Urban & Rural Areas
Manufacturing PMI sees meaningful Unemployment rate has come down
recovery sharply in the past month
60
55.3 30
Expansion
55 52.1
51.8 25
50
50.6 47.2
20
45
Contraction 15
40
35 10
30 30.8 5
27.4
25 0
Oct-17
Oct-18
Oct-19
Apr-17
Apr-18
Apr-19
Apr-20
Jul-17
Jul-18
Jul-19
Jul-20
Jan-20
Jan-17
Jan-18
Jan-19
20
Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20
Source: Kotak Institutional Equities, IHS Markit, Axis MF Research
Data as of 10th July 2020
10Back to Work: Evident Across Industry
Industrial Activity is seeing a Steady Recovery
Tractor sales are at a 17 Month High Rail freight is steadily improving
Tractor Sales, YoY Rail Freight, YoY
20% 15% 10%
0% 1% 5% 1%
0% 0%
-3%
-20% -12%-16% -15%
-17% -10%
-40%
-38% -38%
-20%
-60%
-30%
-80%
-84%
-100% -40%
Oct-19
Apr-19
Apr-20
Jul-19
Jan-19
May-19
Nov-19
Dec-19
May-20
Aug-19
Sep-19
Jun-20*
Mar-19
Jun-19
Jan-20
Mar-20
Feb-19
Feb-20
May-20
Oct-19
Apr-20
Jul-19
Nov-19
Dec-19
Jun-20
Jun-19
Aug-19
Sep-19
Jan-20
Mar-20
Feb-20
Source: CIEC, Morgan Stanley, Bloomberg, Axis MF Research
Data as of 30th June 2020
11And Consumption
Consumption Activity is seeing a slow Recovery
Weekly power demand is going back to normal People Are Going To Buy Vehicles
30,000 0%
0%
25,000 -5%
20,000 -10% -20%
15,000 -15%
10,000 -20% -40%
5,000 -25%
-60%
0 -30% Two Wheelers, YoY Passenger Vehicles, YoY
27th Apr-3rd May
1st-7th Jun
15th Jun-21nd Jun
6th-12thApr
20th-26h Apr
30thMar-5th Apr
8th-14th Jun
13th-19th Apr
25th-31st May
23rd-29thMar
4th-10th May
11th-17th May
18th-24th May
22th -28th Jun
29th Jun-5Jul
16th-22ndMar
-80%
-100%
Jun-20
Jun-19
Jan-20
Oct-19
Apr-20
Jul-19
Aug-19
Nov-19
Dec-19
Sep-19
May-20
Mar-20
Feb-20
Source: Morgan Stanley, CRISIL, Bloomberg, Axis MF Research
Data as of 10th July 2020
12Monsson Start With a Bang!
Till July 8, cumulative rainfall was 18% above long-term
average
• FY2021 Monsoon: normal to excess rainfall
Out of the 36 sub-divisions across India, till
date, four have received deficient rainfall, 18
have received normal rainfall, and 14 have
received excess rainfall
• Sowing status: much higher than last year’s
level
As of July 3, the total kharif acreage was 88%
higher than the same period last year.
• Reservoir levels: significant surplus
Overall, basins and reservoirs were around
54% above long-term average for week ending
July 8
Source: Indian Metrological Department, Axis MF Research. Data as of 10th July 2020
13India Current Account in Surplus
Improving Trade Balance & large FDI & ECB flows offset portfolio
outflows
Quarterly Current Account Balance
Jun-19 Sep-19 Dec-19 Mar-20
In USD Billion
Exports 82.70 80.00 81.20 76.50
Imports 129.50 119.60 117.30 111.60
Trade balance (46.80) (39.60) (36.10) (35.10)
Invisibles 31.80 32.10 33.40 35.60
Current Account Balance (15.00) (7.50) (2.70) 0.50
% of GDP (2.10) (1.10) (0.40) 0.10
Capital Account 28.60 13.60 23.50 17.40
FDI 14.00 7.30 9.70 12.00
Portfolio Investment 4.80 2.50 7.80 (13.70)
Loans (ECB) 9.60 3.10 3.10 9.90
Others 0.20 0.70 2.90 9.20
Overall Balance (including E&O) 13.60 6.10 20.80 17.90
Source: RBI, JP Morgan Chase Bank. Axis MF Research
14Banking Liquidity Remains
Significantly Surplus
Surplus Banking Liquidity aimed at ensuring speedy transmission
10
In Rs Lakh Cr
8
6
4
2
0
-2
-4
Jun-10 Jun-12 Jun-14 Jun-16 Jun-18 Jun-20
Source: Bloomberg, Axis MF Research
15Impact On Rates
Opportunities For Investors, Active Short Strategies Ideal
Rates Have Fallen over 200bps over the 3 Year AAA Spreads Continue To Remain
last 1 year Attractive From A Risk Reward Standpoint
8.0 300
7.5
250
7.0
200
6.5
150
6.0
100
5.5
50
5.0
0
Jun-15 Jun-16 Jun-17 Jun-18 Jun-19 Jun-20
3 Year AAA 5 Year AAA 3 Year AAA V/s Repo
Source: Bloomberg, Axis MF Research.
Data as of 30th June 2020
16Annexures, Disclaimers
& Risk Factors
17Annexure
SEBI Prescribed Performance Annexures
Return of schemes managed by Aditya Pagaria (Total Schemes Managed: 8 Schemes) (As on 30th June 2020)
1 Year 3 Years@ 5 Years@@ Since Inception
Current Current Current Current
Date of
Fund Name CAGR Value of CAGR Value of CAGR Value of CAGR Value of
inception
(%) Investment (%) Investment (%) Investment (%) Investment
of Rs. 10,000/- of Rs. 10,000/- of Rs. 10,000/- of Rs. 10,000/-
Top 3 schemes
Axis Banking & PSU Debt Fund - Regular Plan -
11.72% 11,172 9.20% 13,025 8.77% 15,229 8.87% 19,851
Growth
NIFTY Banking & PSU Debt Index (Benchmark) 8-Jun-12 11.66% 11,166 7.91% 12,569 8.31% 14,909 8.70% 19,595
NIFTY 1 Year T-Bill Index (Additional
8.03% 10,803 7.39% 12,388 7.40% 14,298 7.59% 18,046
Benchmark)
Axis Banking & PSU Debt Fund - Direct Plan -
12.06% 11,206 9.50% 13,131 9.02% 15,406 9.06% 19,162
Growth
NIFTY Banking & PSU Debt Index (Benchmark) 1-Jan-13 11.66% 11,166 7.91% 12,569 8.31% 14,909 8.54% 18,488
NIFTY 1 Year T-Bill Index (Additional
8.03% 10,803 7.39% 12,388 7.40% 14,298 7.60% 17,320
Benchmark)
Axis Treasury Advantage Fund - Regular Plan -
8.86% 10,886 7.87% 12,555 7.89% 14,625 8.14% 23,169
Growth
NIFTY Low Duration Debt Index (Benchmark) 9-Oct-09 8.03% 10,803 7.58% 12,453 7.74% 14,522 8.23% 23,369
NIFTY 1 Year T-Bill Index (Additional
8.03% 10,803 7.39% 12,388 7.40% 14,298 7.00% 20,669
Benchmark)
Axis Treasury Advantage Fund - Direct Plan -
9.19% 10,919 8.33% 12,717 8.34% 14,935 8.71% 18,705
Growth
NIFTY Low Duration Debt Index (Benchmark) 1-Jan-13 8.03% 10,803 7.58% 12,453 7.74% 14,522 8.19% 18,039
NIFTY 1 Year T-Bill Index (Additional
8.03% 10,803 7.39% 12,388 7.40% 14,298 7.60% 17,320
Benchmark)
Axis Treasury Advantage Fund - Retail Plan -
9.06% 10,906 7.80% 12,529 7.59% 14,421 7.80% 21,722
Growth
NIFTY Low Duration Debt Index (Benchmark) 3-Mar-10 8.03% 10,803 7.58% 12,453 7.74% 14,522 8.33% 22,858
NIFTY 1 Year T-Bill Index (Additional
8.03% 10,803 7.39% 12,388 7.40% 14,298 7.13% 20,368
Benchmark)
Refer slide 21 for disclaimer. 18Annexure
SEBI Prescribed Performance Annexures
Return of schemes managed by Aditya Pagaria (Total Schemes Managed: 8 Schemes) (As on 30th June 2020)
1 Year 3 Years@ 5 Years@@ Since Inception
Current Current Current Current
Date of
Fund Name CAGR Value of CAGR Value of CAGR Value of CAGR Value of
inception
(%) Investment (%) Investment (%) Investment (%) Investment
of Rs. 10,000/- of Rs. 10,000/- of Rs. 10,000/- of Rs. 10,000/-
Top 3 schemes
Axis Ultra Short Term Fund - Regular Plan -
6.76% 10,676 NA NA NA NA 7.31% 11,359
Growth
NIFTY Ultra Short Duration Debt Index
10-Sep-18 7.19% 10,719 NA NA NA NA 7.76% 11,445
(Benchmark)
NIFTY 1 Year T-Bill Index (Additional
8.03% 10,803 NA NA NA NA 8.09% 11,508
Benchmark)
Axis Ultra Short Term Fund - Direct Plan -
7.73% 10,773 NA NA NA NA 8.27% 11,543
Growth
NIFTY Ultra Short Duration Debt Index
10-Sep-18 7.19% 10,719 NA NA NA NA 7.76% 11,445
(Benchmark)
NIFTY 1 Year T-Bill Index (Additional
8.03% 10,803 NA NA NA NA 8.09% 11,508
Benchmark)
Refer slide 21 for disclaimer. 19Annexure
SEBI Prescribed Performance Annexures
Return of schemes managed by Aditya Pagaria (Total Schemes Managed: 8 Schemes) (As on 30th June 2020)
1 Year 3 Years@ 5 Years@@ Since Inception
Current Current Current Current
Date of
Fund Name CAGR Value of CAGR Value of CAGR Value of CAGR Value of
inception
(%) Investment (%) Investment (%) Investment (%) Investment
of Rs. 10,000/- of Rs. 10,000/- of Rs. 10,000/- of Rs. 10,000/-
Bottom 3 schemes
Axis Overnight Fund - Regular Plan - Growth* 4.43% 10,443 NA NA NA NA 4.79% 10,625
NIFTY 1D Rate Index (Benchmark) 15-Mar-19 4.48% 10,448 NA NA NA NA 4.84% 10,632
NIFTY 1 Year T-Bill Index (Additional Benchmark) 8.04% 10,804 NA NA NA NA 7.48% 10,980
Axis Overnight Fund - Direct Plan - Growth* 4.48% 10,448 NA NA NA NA 4.86% 10,634
NIFTY 1D Rate Index (Benchmark) 15-Mar-19 4.48% 10,448 NA NA NA NA 4.84% 10,632
NIFTY 1 Year T-Bill Index (Additional Benchmark) 8.04% 10,804 NA NA NA NA 7.48% 10,980
Axis Equity Advantage Fund - Series 2 - Regular Plan -
1.83% 10,183 NA NA NA NA 5.20% 11,590
Growth
75% Nifty 50 TRI + 25% Crisil Composite Bond Fund 3-Aug-17
-5.08% 9,492 NA NA NA NA 4.10% 11,241
Index (Benchmark)
Nifty 50 TRI (Additional Benchmark) -11.51% 8,849 NA NA NA NA 2.19% 10,651
Axis Equity Advantage Fund - Series 2 - Direct Plan -
2.53% 10,253 NA NA NA NA 6.62% 12,050
Growth
75% Nifty 50 TRI + 25% Crisil Composite Bond Fund 3-Aug-17
-5.08% 9,492 NA NA NA NA 4.10% 11,241
Index (Benchmark)
Nifty 50 TRI (Additional Benchmark) -11.51% 8,849 NA NA NA NA 2.19% 10,651
Axis Equity Advantage Fund - Series 1 - Regular Plan -
-2.00% 9,800 5.36% 11,697 NA NA 5.05% 11,650
Growth
75% Nifty 50 TRI + 25% Crisil Composite Bond Fund 25-May-17
-5.08% 9,492 5.49% 11,740 NA NA 5.57% 11,832
Index (Benchmark)
Nifty 50 TRI (Additional Benchmark) -11.51% 8,849 3.95% 11,233 NA NA 4.00% 11,293
Axis Equity Advantage Fund - Series 1 - Direct Plan -
-1.13% 9,887 6.74% 12,164 NA NA 6.45% 12,140
Growth
75% Nifty 50 TRI + 25% Crisil Composite Bond Fund 25-May-17
-5.08% 9,492 5.49% 11,740 NA NA 5.57% 11,832
Index (Benchmark)
Nifty 50 TRI (Additional Benchmark) -11.51% 8,849 3.95% 11,233 NA NA 4.00% 11,293
Refer slide 21 for disclaimer. 20Performance disclaimer
Past Performance may or may not be sustained in future.
#Scheme Performance may not be strictly comparable with that of its additional benchmark in view of hybrid nature of the scheme.
@@The performance data for 5 years period has not been provided for scheme/plan not in existence for 5 years. @The performance data
for 3 years period has not been provided for scheme/plan not in existence for 3 years.
Data As on 30th June 2020.
Aditya Pagaria is managing Axis Ultra short term fund since inception and Axis Liquid Fund, Axis Treasury Advantage Fund, Axis Banking
& PSU Debt Fund since 13th August, 2016, Axis Equity Advantage Fund Series - 1 since 26th May, 2017 & Axis Equity Advantage Fund
Series - 2 since 7th March 2019, Axis Overnight Fund since inception, Axis Money Market Fund since inception.
Calculations are based on Regular plan - Growth Option & Direct plan – growth option NAVs. Face value for Gold ETF is Rs.2,026.8384/-
& Rs. 10/- for all other schemes. Different plans have different expense structure.
The above data excludes performance of Fixed Maturity Plans and all the schemes which have not completed a year. Top 3 and Bottom 3
schemes (based on 1 year performance) managed by Aditya Pagaria has been provided herein.
21Product Labelling
Fund Name Riskometer Product Labelling
Axis Banking & PSU Debt Fund This product is suitable for investors who are seeking*
(An open ended debt scheme predominantly • Regular income over short to medium term
investing in debt instruments of Banks, Public • Investment in debt and money market instruments
Sector Undertakings & Public Financial Institutions) issued by banks, PFIs & PSUs
Axis Ultra Short Term Fund This product is suitable for investors who are seeking*
(An open ended ultra-short term debt scheme • Regular income over short term
investing in instruments such that the Macaulay • Investment in Debt & Money Market instruments
duration of the portfolio is between 3 months and 6 such that the Macaulay duration of the portfolio is
months) between 3 months - 6 months.
This product is suitable for investors who are seeking*
• Capital appreciation over medium to long term
Axis Equity Advantage Fund - Series 1 & 2 • Investment in a diversified portfolio of predominantly
(A close-ended Equity Scheme) equity and equity related instruments across market
cap while managing risk through active hedging
strategies
This product is suitable for investors who are seeking*
Axis Overnight Fund Regular income with high levels of safety and
(An open-ended debt scheme investing in overnight liquidity over short term
securities) Investment in debt and money market instruments
with overnight maturity.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
22Product Labelling
Fund Name Riskometer Product Labelling
Axis Treasury Advantage Fund
This product is suitable for investors who are seeking*
(An open ended low duration debt scheme investing
• Regular income over short term
in instruments such that the Macaulay duration of
• Investment in debt and money market instruments
the portfolio is between 6 to 12 months)
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
23Statutory Details and Risk Factors
Data updated As on 30th June 2020
Past performance may or may not be sustained in the future. Sector(s) / Stock(s) / Issuer(s) mentioned above are for the purpose of
disclosure of the portfolio of the Scheme(s) and should not be construed as recommendation. The fund manager(s) may or may not
choose to hold the stock mentioned, from time to time.
Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd.
(liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the
AMC). Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. This
document represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision.
Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates
shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. No
representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The
AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.
Mutual Fund Investments are subject to market risks, read all scheme related documents
carefully.
24Thank You
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