Axis Flexicap Fund: Strong performance turnaround

Current market context

Market has been volatile since the Trump Administration slapped 50% tariffs on Indian exports to the United States. The Indian Government has taken a firm stand on pursuing an independent policy as far as trade with Russia is concerned. An agreement between the two Governments on trade related matters seem unlikely in the near term unless there are geo-political shifts. The Nifty had bounced back after the Prime Minister announced measures to GST structure. However, trade related concerns has dragged the Nifty below the psychologically important 25,000 level.

Current valuations scenario

The correction in the market has resulted in valuations to be in the reasonable range across market cap segments. While the valuations are lower than long term historical average, corporate earnings will have to provide support to the market. In these market conditions a flexicap strategy may be suitable for long term investors as this strategy will help investors find opportunities in all market cap segments while providing the flexibility to manage risks judiciously depending on changing market outlook. In this article, we will review Axis Flexicap Fund

Source: National Stock Exchange, Advisorkhoj Research, as of 31^st July 2025

Axis Flexicap Fund

The fund was launched in November 2017 and has a track record of wealth creation. The chart below shows the growth of Rs 10,000 monthly SIP in the fund since its inception. You can see that with a cumulative investment of Rs 9.4 lakhs you could have accumulated a corpus of ~ Rs 16.5 lakhs (as of 26^th August 2025) in the last 7 - 8 years.

Source: Advisorkhoj Research, as of 26^th August 2025.

The fund performed consistently and gave 12%+ CAGR returns for sufficiently long investment tenures e.g. 3 years+, 5 years+ across different market conditions in ~ 75% of the instances since the inception of the fund (see the chart below).

Source: Advisorkhoj Research, as of 26^th August 2025.

The SIP performance of the fund was also quite consistently, giving double digit SIP returns (XIRR) for sufficiently long investment tenures e.g. 3 years+, 5 years+ across different market conditions in 80 - 90% of the instances since the inception of the fund (see the chart below).

Source: Advisorkhoj Research, as of 26^th August 2025.

Turnaround in performance

While fund had lagged behind peers for some time, we have a seen a strong performance turnaround in the last 1 year. The chart below shows the monthly returns of the Axis Flexicap Fund versus the benchmark index over the last 12 months. You can see that the fund outperformed the benchmark in 7 out of last 12 months.

Source: Advisorkhoj Research, as of 31^st July 2025.

The fund has consistently been in the upper quartiles for the last 6 consecutive quarters (see the graphic below).

Source: Advisorkhoj Research, as of 30^th June 2025.

A closer look at the market capture ratios of the Axis Flexicap Fund tells the story of delivering strong risk adjusted returns in the last one year. Up Market Capture Ratio tells us how much percentage of the market's (benchmark index) upside was captured by the fund, while Down Market Capture Ratio tells us how much percentage of the market's (benchmark index) downside was arrested by the fund. Up-Market Capture Ratio and Down-Market Capture ratio can give us a sense of risk adjusted returns.

The Up Market Capture Ratio of Axis Flexicap Fund was 123% which implies that if the benchmark index went up by 1% in a month, then the scheme's Net Asset Value (NAV) went up by 1.23%. The fund delivered the excess returns relative to the benchmark without taking excess risk since the Down Market Capture Ratio of the fund was 100% which implies that if the benchmark index went down by 1% in a month, then the scheme's Net Asset Value (NAV) also fell by 0.82% only.

Investment framework

• Look for strong margin of safety (Strong growth opportunity & sharp competitive edge are important source)


• Remain selective across investment universe


• Choose spaces to create gap vs the benchmark, however, allocate with bottom-up approach


• Target for companies that deliver optimal ROE / ROCEs over the medium to long term on a sustained basis


• Select companies with corporate governance, and capital allocation track record


• Inflection point investing - Identify companies that can benefit from inflection points e.g. industry consolidation, improvement in competitive dynamics, regulatory changes, technological breakthrough etc.
  
  

  

  Source: Axis MF

Current portfolio positioning

Axis Flexicap Fund currently has a greater large cap tilt relative to the peer average. The large cap tilt may have helped the fund outperform in volatile market conditions. The large cap tilt may help the fund continue to outperform in an environment of uncertainty and frothy valuations (relative to earnings growth outlook) in certain pockets of the market.

Source: Axis MF Fund Factsheet, as of 31^st July 2025

Source: Axis MF Fund Factsheet, as of 31^st July 2025

Who can invest in Axis Flexicap Fund?

• Investors who aim to diversify their investment across various sectors and market capitalizations


• Investors with a risk appetite for equities and seeking capital appreciation over medium to long term


• Investors looking to build a corpus systematically through SIP (Systematic Investment Plan)


• Investors with minimum 5 year investment horizon

Investors should consult with their financial advisors or mutual fund distributors if Axis Flexicap Fund is suitable for their long term investment needs.