'Our quality bias got rewarded'

While markets have been on a upswing for the better part of the last 3-4 years, the last six months have been marked by a significant shift. Investors have rewarded quality stocks, and dumped those whose high valuations were not backed by fundamentals. As a result, equity funds with a quality bias have outperformed. A case in point being the Axis Focused 25 Fund and its high conviction compact portfolio strategy. The 8-year-old fund is ranked number 1 on both one-year and three-year period among all multicap schemes. In an interview, Jinesh Gopani, Head - Equity, Axis Mutual Fund tells Kumar Shankar Roy about the fund's portfolio construct, stock picking strategy, the rationale behind top holdings and much more. What is driving the performance of Axis Focused 25 Fund? The interesting fact is that we have followed the same philosophy and stock selection approach that we have been following since the inception of Axis Mutual Fund. Talking about last one year, majority of the stocks have been the same with minor adjustments in the portfolio. Around 70% of the corpus is still invested in these stocks. Hence, the key factor driving our performance has been our underlying philosophy of buying in fundamentally good quality and high earnings growth stories rather than betting on short term momentum. It is only in the last 6-8 months that the beta rally broke and all the companies which couldn't justify their high valuations with underlying fundamentals crashed and our philosophy of quality bias got rewarded by market. Despite being a multi-cap fund, was it a conscious decision to always stick to giant and large caps? And, was

This article was originally published on August 14, 2018.