Axis MF sees 40% mop up from Tier-II, Tier-III cities for new fund

Asset management firm sets overall collection target of Rs 1,000-1,500 cr during NFO period

Axis Mutual Fund expects nearly 40 per cent subscription for its newly launched Axis Dynamic Fund to come from Tier -II and Tier-III cities.

The asset management company has set an overall collection target of Rs 1,000-1,500 crore during the new fund offer (NFO) period. The new fund, an open-ended equity scheme, opened on July 11 and will close on July 25.

"We are betting big on Tier-II and Tier-III cities. We expect that 40 per cent of the targeted collection of the NFO will come from beyond the first fifteen cities. The awareness about the mutual fund is on the rise in Tier II and Tier -III cities", Ashwin Patni, head (products and fund manager) of Axis Mutual Fund told media persons here.

The power of the products is the ability to manage the exposure on a dynamic basis, he added.

The asset allocation decision will be reviewed on an on-going basis once in every two months and dynamically linked to movements. The net equity allocation will be between 30 to 100 per cent.

The Axis Dynamic Equity Fund will work on two tiers — the first tier is the model that decides the equity allocation and the second one is to actively manage portfolios within that allocation.

The fund will use a proprietary in-house quantitative model to determine appropriate equity allocation using a 3-pillar approach that considers the valuation, trend and risk of the market. The model will help the fund to arrive at the dynamic allocation on a non-subjective basis.

By isolating the different variables that affect the market in the medium term and by systematically adjusting exposure to deal with them, the fund is consciously managing the market risk, it added.

With this approach, it may look that such funds lag the equity market during a sharp rally, but simultaneously it would allow the fund to reduce drawdowns during periods of turmoil and thus can help deliver reasonable equity exposure with sharply lower risk over a cycle, Axis Mutual Fund said in a statement.