Traditional Life Cycle of a company. Growth Phase

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Shawn Fisher
6 years ago
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2 Today s Mid Caps are the Large Caps of tomorrow Traditional Life Cycle of a company Start-up Phase Growth Phase Mature Phase Emerging companies High growth phase But prone to higher risks Business not yet well established Small Caps Superior growth profile Established track record Maintains flexibility Lower risk compared to smaller companies Mid Caps Stable growth Established business models Reduced flexibility Lower risk compared to Mid Cap companies Large Caps

3 A decade ago, today s Large Caps were Mid Caps Nifty Constituents: 2000 & 2010 December 2000 Hindustan Unilever Larsen & Toubro GlaxoSmithkline Consumer Healthcare Infosys Technologies Tata Steel Dabur India Reliance Industries HPCL Asian Paints Reliance Petroleum BHEL Mahindra & Mahindra ITC Hero Honda Motors Indian Petrochemicals Zee Entertainment Dr Reddys Laboratories Hewlett-Packard Globalsoft MTNL Castrol India Procter & Gamble Hygiene and Health Care State Bank of India Novartis India Tata Global Beverages Satyam Computer Reliance Infrastructure Tata Power Company Ranbaxy Laboratories Glaxosmithkline Pharma ABB ICICI Ltd ACC Indian Hotels HDFC Grasim Industries Tata Chemicals Cipla Ambuja Cements Reckitt Benckiser (I) NIIT Bajaj Holdings & Investment Kochi Refineries Hindalco Industries Colgate-Palmolive (India) HCL Infosystems HDFC Bank Tata Motors Oriental Bank of Commerce Nestle India Britannia Industries December 2010 Reliance Industries Hindalco Industries Power Grid Corp of India Infosys Technologies Sterlite Industries Sesa Goa ICICI Bank Jindal Steel & Power Siemens India Larsen & Toubro NTPC Jaiprakash Associates HDFC Wipro Reliance Infrastructure ITC GAIL Ambuja Cements HDFC Bank Tata Power ACC State Bank of India Dr Reddy's Laboratories HCL Technologies Tata Consultancy Bajaj Auto SAIL Services Bharti Airtel IDFC DLF Tata Motors Hero Honda Motors Reliance Communications ONGC Maruti Suzuki India Ranbaxy Laboratories Tata Steel Cipla Reliance Power BHEL Sun Pharmaceutical BPCL Axis Bank Punjab National Bank Reliance Capital Mahindra & Mahindra Kotak Mahindra Bank Hindustan Unilever Cairn India Suzlon Energy signifies erstwhile Mid Cap companies. Mid Caps defined as those with market capitalisation within the range of the constituents of BSE Mid Cap index. The companies have been sorted on the basis of % weight in the Nifty. Source of data: Bloomberg. This data does not constitute a stock specific recommendation by Axis AMC.

4 Winners in Mid Caps create long term wealth A journey of thousand miles starts with small steps. Some of the Large Caps today were Mid Caps not so long ago. Start Date Market Market Capitalisation Capitalisation ` Crs. (Dec-10) ` Crs. Return (CAGR) Kotak Mahindra Bank Dec , % Bharti Airtel Feb-02 7, , % Sun Pharmaceuticals Industries Jan-01 2,841 49, % Asian Paints Dec-00 1,776 27, % Past performance may or may not be sustained in the future. The companies mentioned above are only for explaining the strategy of Axis Midcap Fund and should not be construed as recommendations from Axis Asset Management Co. Ltd. Source of data: Bloomberg. Returns are compounded annualised.

5 Valuations well off peak Date P/E BSE Mid Cap Index Valuation Discount to Dec Dec % Date P/E BSE Sensex Valuation Discount to Dec Dec % Source of data: Bloomberg. Data as on 31st December P/E = Price-to -earnings ratio = Market Price per Share/ Earning per Share.

6 What is the Mid Cap opportunity? Capitalization Number of Companies Share of Market Cap. Large Caps Approx % Mid Caps Approx % Small Caps >7000 7% The Mid Cap universe consists of mid-life cycle, high growth, financially established companies - Combination of higher growth & flexibility of smaller companies, with - Established track record, financial performance & better liquidity Source of data: Bloomberg, BSE. Classification based on market capitalization range of BSE Mid Cap Index. As on 31 December 2010.

7 Risk Management Mid Caps tend to be higher on the risk-reward scale than Large Cap companies There is a need to manage the higher risks from Mid Cap investing Solution: Larger Mid Caps - Best of both worlds mix of characteristics of Large and Mid Cap companies - Flexibility and ability to respond to market opportunities leads to higher growth ability compared to Large Caps - While their established track records, experienced management teams, market share, name recognition reduces risk relative to smaller companies

8 Larger Mid Caps - Higher returns with lower risk Larger Mid Caps Smaller Mid Caps Past performance may or may not be sustained in the future. This is historical data for the period 31 Dec 2005 to 31 Dec Returns are compounded annualised. Risk in the above chart stands for standard deviation. Performance and risk relate to equal-weighted performance of BSE Mid Cap constituents. Larger Mid Caps are those companies with a market cap greater than or equal to the median stock of the BSE Mid Cap Index. Smaller Mid caps are those companies with a market cap below the median of the BSE Mid Cap Index. Market Cap based classification has been done on annual basis. Source of data: Bloomberg.

9 Axis Midcap Fund Best of both worlds Mid & Small Size Companies Large Companies Flexible Innovative Better Growth Potential Larger Mid Caps Proven Management Established Track Records Liquidity Less Risky

10 Axis Midcap Fund Key Features Investment Objective To achieve long term capital appreciation by investing predominantly in equity & equity related instruments of mid size companies. The focus of the fund would be to invest in relatively larger companies within this category. Benchmark BSE Mid Cap Index Asset Allocation Mid Cap Equities % Other Equities & Fixed Income 0-20% Allocation within Mid Caps Larger Mid Caps % Smaller Mid Caps 0-25% (based on mid-point of benchmark stocks capitalization) Recommended Investment Horizon 5 Years or more Fund Manager Pankaj Murarka - Fund Manager, Equity Load Structure Entry Load: Nil Exit Load: 1% if redeemed / switched out within 1 year from the date of allotment New Fund Offer (NFO) Period 31st January 2011 to 14th February 2011 NFO Price ` 10 per unit during NFO & at NAV based prices thereafter Minimum Application Amount ` 5,000 and in multiples of ` 1 thereafter (for lump sum applications) Switch-In/ Sleep in Peace Option (SIP)* Available during NFO period & on an ongoing basis STP Available post NFO period EasyCall Available during NFO period & on an ongoing basis *Refers to Systematic Investment Plan.

11 General Disclaimers and Risk Factors Important Note: While mid caps have greater potential for growth when compared to large caps, they are riskier investments. Mid caps over the long term tend to outperform large caps. However, this may not be true for all time periods. Statutory Details: Axis Mutual Fund, sponsored by Axis Bank Ltd. has been established as a Trust under the Indian Trusts Act, 1882 (liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC) Risk Factors: All Mutual funds and securities investments are subject to market risks and there is no guarantee that the investment objective of the schemes will be achieved. The NAV of the units issued by the Mutual Fund under the schemes can go up or down depending on various factors and forces affecting securities markets. Past performance of the Sponsor, its affiliates/the AMC/the mutual fund or its schemes does not indicate the future performance of the scheme. The sponsor is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. Investments in the scheme are subject to various investment risks such as trading volumes, settlement risk, liquidity risk, default risk, risk of possible loss of principal, etc. Equity and equity related instruments are volatile by nature. Mid & small size companies may be more volatile & less liquid than larger companies. Mutual Fund Investments are subject to market risks. Please read the Scheme Information Documents and Statement of Additional Information (SID & SAI) carefully before investing. Axis Midcap Fund (an open-ended equity scheme) is only the name of the scheme and does not indicate the quality of the scheme, its future prospects or returns. Investment objective: To achieve long term capital appreciation by investing predominantly in equity & equity related instruments of mid size companies. The focus of the fund would be to invest in relatively larger companies within this category. Asset Allocation: Equity and Equity Related Instruments of Midcap companies %, (of which Larger Midcap Companies 75% 100%, Smaller mid-cap Companies 0 25%), Equity and Equity Related Instruments of Non Midcap Companies 0 20%, Debt and Money Market Instruments 0-20%, including securitized debt up to 20%, derivatives up to 100% and foreign securities up to 40% of the net assets. Load: Entry load nil. Exit load 1% if redeemed/switched out within one year from date of allotment. Terms of issue and sale and redemption of units: Issue of Units of Rs. 10 each during the NFO period and at NAV based prices during the ongoing offer. The scheme offers sale and redemption facility on all business days during the ongoing offer. The NAV of the scheme would be calculated on all business days. The SID & SAI/Key Information Memorandum cum Application form are available at AMC and Registrar offices, Investor Service Centres, the AMC website ( and with empanelled distributors.

Quantum Index Fund. Factsheet for the month of August, 2010

Quantum Index Fund. Factsheet for the month of August, 2010 Quantum Index Fund Factsheet for the month of August, 2010 Quantum Index Fund An Open ended Exchange Traded Fund Fact Sheet as on 31st August 2010 Net Asset Value as on August 31, 2010 (Rs./Unit) Growth