New fund alert: 'Axis India Manufacturing Fund'

• The new fund offering (NFO) opens on December 1, 2023.
  
• The fund is designed to strategically invest in sectors benefiting from India's economic shifts.
  
• The fund will adopt a bottom-up strategy, selecting stocks across market caps.
  

Axis Mutual Fund has launched the Axis India Manufacturing Fund, an open- scheme that mirrors India's manufacturing landscape, and is benchmarked against the Nifty India Manufacturing TRI. The new fund offer (NFO) opens on December 1st, 2023, and seeks to enable investors to tap into the potential growth of India’s manufacturing sector, which is anticipated to expand in the years ahead. Investors can participate in the NFO until December 15, 2023.

Why manufacturing as a theme?

India is heading toward an exciting future, embracing modern technologies and focusing on sustainable growth. Government actions, along with labour and tax changes, position India as a competitive global manufacturing centre. India relies heavily on consumption, making it less prone to global economic shifts. The surge in growth is fueled by enhanced economic confidence driving product demand and efficient use of production capabilities. Hence, manufacturing as a theme holds a lot of promise.

Axis India manufacturing fund's strategic focus

The fund is designed to strategically invest in sectors benefiting from India's economic shifts, aiming for a diverse portfolio reflecting the depth of India's manufacturing strength.


Encompassing sectors like capital goods, consumer durables, textiles, and pharmaceuticals, the fund will offer a comprehensive investment avenue within India's manufacturing landscape.

Investment strategy across economic segments

The fund targets three companies across three sectors of the Indian economy:

Investments (Capex cycle): Companies boosting production through investments in equipment and research.

Consumption: Industries witnessing increased demand due to rising incomes and a trend towards premium products.

Net exports: The fund will be focused on companies benefitting from India's global supply chain integration.

Investment approach and focus

The fund will adopt a bottom-up strategy, selecting stocks across market caps. Emphasising active sector allocation and a 'Quality' investing style, it also aims to look at underrepresented segments in Indian listed markets.


Says B Gop Kumar, MD and CEO, Axis Asset Management Compnany (AMC), "This thematic fund, is designed to capitalise on India’s growing momentum, focusing on sectors that stand to redefine India’s industrial contours.”

Currently there are only a few manufacturing funds in India with a one and three year track record.

Funds	1-year return (%)	3-year return (%)
Aditya Birla Sun Life Manufacturing Equity Fund - Direct Plan	18.33	16.99
ICICI Prudential Manufacturing Fund - Direct Plan	32.20	31.86
Kotak Manufacture in India Fund - Direct Plan	21.62	--

Source: Value Research

“Investors should not take positions into these thematic funds for more than 10% of their portfolio allocation. That way if it doesn’t work out, they won’t face they won’t face a large drawdown on their portfolio,” says Abhishek Kumar, founder and chief investment advisor at SahajMoney, a financial planning firm.

This is because thematic funds like manufacturing funds can carry higher risks due to their focused investment in specific sectors or trends. Their success hinges on the performance of those particular themes, making them more vulnerable to market fluctuations and industry-specific challenges.