Axis Mutual Fund on November 29, 2023, announced the launch of Axis India Manufacturing Fund. According to the mutual fund house, the scheme aims to enable investors to leverage the potential of India’s manufacturing theme. The new fund offer (NFO) is open for subscription till December 15, 2023
The manufacturing sector is in the spotlight. Recently, it has caught the fancy of both investors and fund managers alike.
Investors and fund managers are shifting their focus towards the domestic manufacturing sector, and this redirection is well-justified. This sector holds pivotal position in the growth of Indian economy and contributes around 17 per cent to India’s gross domestic product (GDP).
The government has also taken various initiatives to boost the growth in the sector with a target of having 25 per cent of the country’s GDP in manufacturing by 2025. The prevailing sentiment among experts is that India is poised to assert itself as a formidable player in global manufacturing in the years to come. Projections indicate that the manufacturing sector is on track for significant expansion, with expectations of a fourfold increase from $440 billion to $1,800 billion in the next 10 years.
Axis Mutual Fund, India’s eighth largest fund house, has come up with India’s fourth actively managed manufacturing-based thematic fund, Axis India Manufacturing Fund. The scheme will be managed by Shreyash Devalkar and Nitin Arora. The fund will track the Nifty India Manufacturing –TRI index. The minimum subscription amount is Rs 5,000 and in multiples of Re 1.
The fund has been launched at a time when the manufacturing index is soaring high. In the last one year, the broadly-tracked index NSE-Nifty 50 TRI has delivered 8.45 per cent, while the manufacturing index, Nifty Indian Manufacturing-TRI has delivered 21.47 per cent returns.
Says B. GopKumar, managing director and CEO, Axis Asset Management Company (AMC): “The Axis India Manufacturing Fund arrives at a critical juncture where India’s economy is being fuelled by strategic initiatives like ‘Make in India’, and a spate of reforms. This thematic fund is designed to capitalise on India’s growing momentum, focusing on sectors that stand to redefine India’s industrial contours. We invite investors to embrace the future with Axis India Manufacturing Fund, a fund that’s engineered to grow with India’s manufacturing ambitions.”
At present, there are three actively managed (ICICI Prudential Manufacturing Fund, Kotak Manufacture in India, and Quant Manufacturing Fund) and two passively managed (Mirae Asset Nifty India Manufacturing ETF and Navi Nifty India Manufacturing index fund) manufacturing-based thematic funds in existence. Of these, ICICI Prudential Manufacturing Fund is the oldest scheme in this space.
Axis India Manufacturing Fund aims to invest in companies engaged in manufacturing activity.
Says Ashish Gupta, chief investment officer, Axis Mutual Fund: “With Axis India Manufacturing Fund, we aim to curate a portfolio that not only reflects the theme’s robust growth potential, but also actively contributes to our investors’ wealth creation opportunities, positioning them to benefit from the companies that are set to be the vanguards of this industrial renaissance.”
In terms of investment strategy, the fund will follow a bottom-up approach with a multi-cap stock selection strategy. In addition to adopting an active sectoral allocation and ‘Quality’ style of investing, Axis India Manufacturing Fund would also focus on the under-represented segments of Indian listed markets.
There is no denying that manufacturing is an emerging theme. As India aims to become a manufacturing powerhouse, this sector presents significant opportunities. However, the effectiveness of the fund manager in identifying opportunities in this space remains to be seen.
For the time being, investors may like to give the fund a miss. If you have already invested sufficiently in a diversified equity fund, you might explore investing in a manufacturing-based thematic fund with a proven track record or opt for a passively managed fund from this space.