This article will provide mutual fund investors with a systematic and simple step-by-step comparative analysis between two prominent mutual funds: the Axis Growth Opportunities Fund vs the Parag Parikh Flexi Cap Fund. We aim to determine which fund offers better investment opportunities and should be considered for inclusion in your investment portfolio. So, without further delay, let’s dive into this analysis.
Overview of the Investment Approach
Overview of Axis Growth Opportunities Fund
The Axis Growth Opportunities Fund is known for its focus on investing in growth-oriented companies across various sectors. To achieve long-term capital appreciation, this fund seeks out companies with the potential for sustainable growth. The fund managers carefully analyse companies and identify those with strong growth prospects.
Investment Focus of Axis Growth Opportunities Fund
The Axis Growth Opportunities Fund concentrates its investments on companies with strong growth potential. It aims to identify companies that operate in sectors poised for significant expansion and have a competitive advantage. The fund managers focus on selecting stocks of companies with a rigorous track record of revenue and earnings growth.
Overview of Parag Parikh Flexi Cap Fund
The Parag Parikh Flexi Cap Fund is widely regarded for its flexible investment approach. This fund is not restricted by market capitalisations or geographical regions, allowing it to invest in companies across various market segments. The fund managers employ the Bottom-up approach to stock picking and seek out businesses with sustainable competitive advantages.
Investment Approach of Parag Parikh Flexi Cap Fund
The Parag Parikh Flexi Cap Fund follows a unique investment approach that enables it to invest across market capitalisations and geographical regions. The fund managers carefully analyse companies and assess their growth potential, regardless of size or location. This approach allows the fund to capitalise on opportunities across different sectors and markets.
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Management Analysis
First, let’s examine the management of both funds. The Parag Parikh Flexi Cap Fund is managed by four experienced fund managers, namely Mr Rajeev, Mr Raunak Onkar, Mr Raj Mehta, and Rukun Tarachandani, the latest addition to the team. Mr Rajeev and Mr Onkar have managed this fund for the past ten years, while Mr Raj Mehta has a seven-year tenure.
On the other hand, the Axis Growth Opportunities Fund is managed by two fund managers, Mr Jinesh Gopani and Mr Vinayak Jayanath. Mr Jinesh Gopani has managed the fund since its inception, accumulating four years and eight months of experience. However, Mr ViMrak Jayanath is a recent addition, resulting in a fund management change.
Portfolio Analysis
Next, we’ll delve into the portfolio analysis of these funds.
Market Cap Allocation
The Parag Parikh Flexi Cap Fund has allocated a significant portion of its portfolio to large-cap companies. However, it has yet to invest heavily in mid-cap and small-cap companies. On the contrary, the Axis Growth Opportunities Fund exhibits better diversification across all market capitalisations. Both funds have allocated around 17% of their portfolio in foreign equity.
Portfolio Overlapping
Regarding portfolio overlapping, the Parag Parikh Flexi Cap Fund overlaps approximately 19.56% of the Axis Growth Opportunities Fund’s portfolio. Conversely, the Axis Growth Opportunities Fund overlaps about 13.14% of the Parag Parikh Flexi Cap Fund’s portfolio.
Portfolio Valuations
Regarding portfolio valuations, the Parag Parikh Flexi Cap Fund holds more fairly valued and undervalued stocks. On the other hand, the Axis Growth Opportunities Fund has a higher proportion of overvalued stocks.
Portfolio Quality
Moving on to portfolio quality, the Parag Parikh Flexi Cap Fund boasts stronger stocks than the Axis Growth Opportunities Fund.
Returns Analysis
Let’s now assess the returns generated by both funds over the past few years.
Historical Returns
The Parag Parikh Flexi Cap Fund outperformed the Axis Growth Opportunities Fund in historical returns in the first, second, and third years.
Calendar Returns
Over the past four years, the Parag Parikh Flexi Cap Fund has outperformed the Axis Growth Opportunities Fund’s three regarding calendar returns, while the latter has outperformed once.
Rolling Returns
Considering both one-year and three-year rolling returns, the Axis Growth Opportunities Fund has outperformed the Parag Parikh Flexi Cap Fund.
SIP Returns
The Parag Parikh Flexi Cap Fund has outperformed the Axis Growth Opportunities Fund in SIP returns for one year, two years, and three years.
Now, let’s assess the risk associated with these funds to identify the best risk-adjusted returns.
Standard Deviation
In terms of standard deviation, a lower value indicates better performance. The Parag Parikh Flexi Cap Fund performs better in this regard than the Axis Growth Opportunities Fund.
Beta
A lower beta value is favourable for a fund. Once again, the Parag Parikh Flexi Cap Fund outperforms the Axis Growth Opportunities Fund in beta.
Sharpe Ratio
The Sharpe ratio indicates a fund’s risk-adjusted returns with a desirable higher value. In this case, the Parag Parikh Flexi Cap Fund has a higher Sharpe ratio than the Axis Growth Opportunities Fund.
Alpha
Alpha represents the excess return generated by a fund over its benchmark. A higher alpha value is preferable. Again, the Parag Parikh Flexi Cap Fund has outperformed the Axis Growth Opportunities Fund.
Maximum Drawdown
The maximum drawdown reflects the negative return generated by a fund over a specific period. A lower value is favourable. The Parag Parikh Flexi Cap Fund outperforms the Axis Growth Opportunities Fund regarding maximum drawdown.
Mean Returns
Higher mean returns indicate better fund performance. Once again, the Parag Parikh Flexi Cap Fund outperforms the Axis Growth Opportunities Fund in terms of mean returns over the past three years.
Ratings and Expense Ratios
Regarding ratings, research agencies like CRISIL, Value Research, and Morningstar have given the Parag Parikh Flexi Cap Fund five stars, while the Axis Growth Opportunities Fund has received three stars. However, it’s important to note that these funds have yet to be rated by all agencies.
Regarding expense ratios, the Axis Growth Opportunities Fund has a more favourable ratio than the Parag Parikh Flexi Cap Fund.
Conclusion
In conclusion, based on our analysis, the Parag Parikh Flexi Cap Fund emerges as the better option than the Axis Growth Opportunities Fund. However, it is important to note that these funds belong to different categories and have minimal portfolio overlapping. Therefore, investing in both funds can provide diversification benefits to your portfolio. Remember, whether you invest in one or both funds, opt for the direct plan to save on commission fees.
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Frequently Asked Questions (FAQs)
How long have the fund managers been managing these funds?
For the Parag Parikh Flexi Cap Fund, Mr Rajeev and Mr Raunak Onkar have managed the fund for the past ten years, while Mr Raj Mehta has a seven-year tenure. In the case of the Axis Growth Opportunities Fund, Mr Jinesh Gopani has managed it since its inception, amounting to four years and eight months of experience.
Which fund demonstrates better risk-adjusted returns?
The Parag Parikh Flexi Cap Fund outperforms the Axis Growth Opportunities Fund in various risk parameters, such as standard deviation, beta, Sharpe ratio, alpha, maximum drawdown, and mean returns. Hence, it offers better risk-adjusted returns.
Which fund has a more diversified market cap allocation?
The Axis Growth Opportunities Fund exhibits better diversification across all market capitalisations than the Parag Parikh Flexi Cap Fund.
Are these funds suitable for long-term investment?
Are these funds suitable for long-term investment?
Are these funds suitable for risk-averse investors?
The Parag Parikh Flexi Cap Fund may be ideal for risk-averse investors due to its lower volatility and downside risk than the Axis Growth Opportunities Fund. However, it’s always recommended to consult a financial advisor before making investment decisions.
Do these funds have international equity exposure?
Yes, the Parag Parikh Flexi Cap Fund has exposure to international equities, providing investors with global market exposure.
Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory. This is not an investment advisory. The blog is for information purposes only. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.
Past performance is not indicative of future returns. Please consider your specific investment requirements, risk tolerance, goal, time frame, risk and reward balance, and the cost associated with the investment before choosing a fund or designing a portfolio that suits your needs. The performance and returns of any investment portfolio can neither be predicted nor guaranteed.
The information provided in this article is solely the author/advertisers’ opinion and not investment advice – it is provided for educational purposes only. Using this, you agree that the information does not constitute any investment or financial instructions by Ace Equity Research and the team. Anyone wishing to invest should seek their own independent financial or professional advice. Do conduct your research along with registered financial advisors before making any investment decisions. Ace Equity Research and the team are not accountable for the investment views provided in the article.
S.K. Singh (B.Sc., DHRM, PGDB (Manipal), Ex-Banker (10 years Exp.)), AMFI Reg. No.-251149.
At the helm of Ace Equity Research is our esteemed founder, S.K. Singh. With a solid educational background and years of experience in the field, S.K. Singh brings valuable expertise to our platform.
S.K. Singh's passion for financial markets and dedication to helping investors make informed decisions led him to establish Ace Equity Research. With a deep understanding of the intricacies of the investment landscape, he has a Commitment to Excellence and a Data-Driven Approach to Equity Research.
