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Our conviction in Axis Long Term Equity's portfolio manager Jinesh Gopani, and his focus on long-term investing, drive our rating. The consistent execution of the strategy is reflected in the fund’s long-term performance, and we see this as a positive. Based on these factors, we maintain a Morningstar Analyst Rating of Silver on the fund across all its share classes.Gopani has been managing this fund since April 2011 and has been able to execute the strategy with consistency so far. We think that he stands out as an efficient stock-picker who believes in investing based on his high-conviction ideas. Gopani looks for companies that have the capability to grow over a three- to five-year period and places a lot of emphasis on finding quality names. The manager typically invests about 50%-70% of the portfolio in large-cap stocks. The team follows an in-depth process that aims to identify under-researched ideas. The research process and the manager’s style of investing give the portfolio a distinct character that reflects Gopani’s high-conviction ideas. The portfolio is markedly benchmark-agnostic and typically shares a very low overlap of about 25%-30% with the S&P BSE 200 Index. From a valuation perspective, the team can tend to invest in stocks that are slightly expensive in relative terms as long as they meet the internal quality and growth criterion.The current investment team seems well-placed and seems to work well together. The team has been adept at retaining talent, as evidenced by the stability of the team since 2016. The AMC witnessed some transient issues in the recent past but has taken pre-emptive measures to strengthen its processes and tighten them. We continue to monitor any changes that the AMC makes and the likely impact of these on an investor’s portfolio.Despite being the largest fund in its Morningstar Category, the fund’s long-term performance has remained positive. The AMC has internal limits in terms of capacity, and we think that this is a positive. The fund has remained true to its mandate and will continue to be managed in the same manner going forward. Notwithstanding underperformance in 2016, 2017, and 2021, we think the fund’s long-term performance holds it in good stead. Overall, we think Gopani has been able to manoeuvre the fund successfully across market cycles. The manager had stood by his stock picks despite short-term market aberrations based on his long-term focus on investing.
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