Everything you need to know about Axis Global Equity Alpha Funds of Fund (FOF)

As written on: 2^nd Feb, 2021

Those who are well aware about their life's short term and long term financial goals such people are able to chart out additional investment plans. Financial planning and investment planning go hand in hand. Not everyone is able to make a foolproof investment plan. Some people feel that the term financial planning is a complicated one. In reality it is not as difficult as it sounds. The first step of financial planning is making a list of your short term and long term financial goals. When you have a defined set of goals of course investment planning might become a little bit easier than anticipated. Several investors do not understand that if they want to build wealth over the long term then they need to start saving at an early stage of my life. People have a tendency of saving less and spending more. This mentality isn't going to help them build a desired corpus over the long-term. In the modern times people have adapted to the luxury that they are not willing to distance themselves from this lifestyle. Those who realize the importance of savings at an early stage in their life do not have to worry about fulfilling their lives long term financial goals. The early you start saving the better you will be at it. That way you have more money in your hand to build your desired corpus. Saving isn't that difficult. You just need to focus on the important expenses and ignore the unnecessary ones. People generally tend to spend first and then save whatever is left. However, the formula should be such that you first save a dedicated portion from your monthly income and then spend what is left. However savings aren't sufficient to beat inflation. A bottle of 1 litre mineral packaged water that cost 10 rupees ten years ago costs twice today. In order to make sure that you are able to not only save and grow your existing wealth you need to invest.

Indian investors have been more comfortable with sticking to conservative investment options in the past. Conservative investments are known for their less risky profile. Conservative investors do not want to take a risk with their finances. The problem with conservative schemes is that the interest rate that the offer is on the lower end. If you have long-term financial goals like building a solid retirement corpus or giving your daughter the destination wedding showers or if you want to send your children abroad for overseas education then sole investments in such conservative instruments may or may not be able to help you achieve these goals. Young investors should be ready to take some risk with the finances if they want to increase their chances of earning capital appreciation over the long term. Why should you invest in schemes that are unable to offer you decent capital appreciation or interest rates? Those who want to create wealth or build a decent corpus over the long term can consider investing in modern day market linked schemes like mutual funds.

What are mutual funds?

Ever since their inception in India, mutual funds have gained traction among Indian investors. People are now beginning to realise that investments in conservative financial schemes do not hold the potential to offer them the desired capital appreciation.

SEBI (Securities and Exchange Board of India) the market regulator of securities and commodities in India describes mutual funds as-

'A mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in the offer document. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with the quantum of money invested by them. Investors of mutual funds are known as unitholders. The profits or losses are shared by the investors in proportion to their investments. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public.'

Mutual funds are further categorised by SEBI for investors to be able to take an informed investment decision. This categorisation has been done keeping different attributes in mind such as the risk profile of the mutual fund, its investment objective, its asset allocation strategy etc. Some of the major mutual fund categories include equity, debt, solution oriented, hybrid, Fund of Fund, index, ETFs etc. International mutual funds too are gaining popularity among Indian investors these days. Global funds follow the unique investment strategy of investing in foreign securities and foreign markets thus giving Indian investors an opportunity to seek capital appreciation by investing in economies across the globe. If you are someone who is seeking capital appreciation by investing in global markets you can consider investing in Axis Global Equity Alpha Fund of Fund.

About Axis Global Equity Alpha Fund of Fund

Axis Global Equity Alpha Fund of Fund is an open ended fund of fund scheme investing in Schroder International Selection Fund Global Equity Alpha

Investment Objective of Axis Global Equity Alpha Funds of Fund

The investment objective of Axis Global Equity Alpha Funds of Fund is to provide long term capital appreciation by predominantly investing in Schroder International Selection Fund Global Equity Alpha, a fund that aims to provide capital growth by investing in equity and equity related securities of companies worldwide. The Scheme may also invest a part of the corpus in debt, money market instruments and / or units of liquid schemes in order to meet liquidity requirements from time to time.

Risk profile of Axis Global Equity Alpha Funds of Fund

Axis Global Equity Alpha Funds of Fund carries a very high risk profile. Investors are advised to consult their financial advisors before investing in this scheme. The performance of the Axis Global Equity Alpha Fund of Fund will be affected by a number of risk factors like general risk, investment objective, regulatory risk, etc. Axis Global Equity Alpha Fund of Fund does not guarantee any returns and hence investors should carefully look in the offer document prior to investing.

Axis Global Equity Alpha Fund of Fund’s Investment Strategy

Axis Global Equity Alpha Funds of Fund will be passively managed fund investing predominantly in units/shares of Schroder International Selection Fund Global Equity Alpha. The investment made in the Schroder International Selection Fund Global Equity Alpha will be based on the subscriptions and redemptions received in the Scheme and within the overall limits specified by SEBI / RBI

Things to keep in mind before investing in Axis Global Equity Alpha Fund of Fund

If you have decided to invest in Axis Global Equity Alpha Fund of Fund to achieve your life's long-term financial goals you are a few things that you should keep in mind.

Decide whether you want to make a lump sum investment or start a SIP

You must be aware that there are multiple ways to make an investment in mutual funds.One way to invest in mutual funds is by making a one time lump sum investment. The lump sum investment is generally made at the beginning of the investment cycle. Investors are allotted units in quantum with the investment amount and depending on the existing net asset value of that particular fund. A Systematic Investment Plan on the other hand is an easy and convenient way to invest in mutual funds. All an investor has to do is complete a one time mandate with their bank following which every month on a fixed date a predetermined amount is debited from the savings account and electronically transferred to the mutual fund. An individual has to be KYC compliant if they want to make investment in mutual funds via SIP. Those who wish to invest in mutual funds over the long term and build a corpus to fulfill their life's financial goals you only opt for a systematic investment plan. Through SIPs one can even benefit from the power of compounding. In Mutual Funds compounding refers to the interest on the interest earned from the initial investment amount. Whenever a mutual fund scheme generates capital appreciation this amount is invested back into the fund. Due to compounding over the long term this small investment amount can multiply and turn into a big corpus. Investors should also understand that SIP investments allowed rupee cost averaging. When the net asset value of a mutual fund is low, more units are allotted to the investor's portfolio. Similarly, when the NAV is high, lesser units are allotted. This is referred to as rupee cost averaging and gives your mutual fund investments an opportunity to stand strong against the market volatility.

Understand the investment objective of the scheme

Before investing in any mutual fund scheme investors should first understand whether the investment objective of the scheme aligns with that of theirs. There are several moments when people invest in a particular fund or scheme just because their peers or relatives have done so. One needs to understand that just because someone has invested in a scheme that doesn't mean they should do the same. No one is going to take the responsibility if you invest in the wrong scheme and incur losses in the process. Every mutual fund scheme has a clear set of goals and objectives and investors should read these carefully and determine whether the scheme has the potential to help them with their income needs.

Understand the risk appetite of the scheme

Every mutual fund scheme carries a different risk profile. Investors should understand that every investment scheme comes along with its own set of risks. Understand the risks involved with the investment scheme before investing in it. Also, several financial advisors ask investors to first understand and determine their appetite before investing in any type of financial instruments. Risk appetite is nothing but an individual's ability to take a certain amount of risk with their finances and invest in a scheme with the hope of generating capital appreciation at some point of time in future. Only invest in a mutual fund scheme if you are able to bear the short-term risks that come along with that investment.

Although mutual funds are known to offer capital appreciation over the long-term investors should bear in mind that mutual fund investments are exposed to market volatility. Investments made in mutual fund schemes do not guarantee returns. It is always a good idea to keep a well diversified portfolio. Investors should never depend on one particular asset class for generating income. Well diversified portfolio that consists of both equity and debt instruments can help one achieve their life's short term and long term financial goals. Also, investors should do some background checks about the fund that they are about to invest in it. They can also compare the performance of the fund with other mutual funds that fall in the same category to determine whether the fund has been consistent in generating capital appreciation. Investors should also check for the expense ratio of the fund and make sure that it is not on the higher end. An expense ratio may seem like a minuscule fee and the time of investment, but when it comes to withdrawing your capital appreciation it can eat a decent portion of your earned income also it is always a good choice to invest in a consistent performing fund then obtain for a top performer. Generating consistent capital appreciation is far better than earning capital high capital appreciation for a few for a limited period of time. If you are new to the world of investing or mutual funds in general you should consult a financial advisor who might be able to help you make an informed investment decision.

Axis Global Equity Alpha Fund of Fund
An open ended fund of fund scheme investing in Schroder International Selection Fund Global Equity Alpha

Note: Investors will be bearing the recurring expenses of the scheme in addition to the expenses of other schemes in which Fund of Funds scheme makes investment.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.