Head of equity explains the way forward for underperforming Axis funds

Several of Axis Mutual Fund's key funds have been seeing long-drawn periods of underperformance. To gain insights into future strategies, we spoke with Shreyash Devalkar, Head - Equity at Axis Mutual Fund. In this interview, Devalkar provides insights into different changes that are being made in the fund portfolios he manages and shares key learnings during this process. Here is the edited transcript of the interview. The AMC's natural gravitation towards quality and growth worked well for over a decade when the economy had low-to-moderate interest rates. But with interest rates topping out, does this put the kind of strategies that worked for you in an unfamiliar territory? We have always prioritised evaluating multiple sectors and companies. The number of stocks rising in our mid-cap, small-cap, and blue-chip funds is an outcome of this. We try to see valuation in the context of ROE (return on equity) and free cash flow. So, if you take the chemical industry, the free cash flow is probably low over cycles. In the retail industry, if a company is opening new stores, then obviously, the free cash flow will not be there. Then, you would have to look at the free cash flow generation at the individual store level rather than at the company level. So, you may try to slice and dice around this, but the point is that valuation in the

This article was originally published on February 19, 2024.