Axis Mutual Fund has announced the launch of its latest offering, the Axis Nifty500 Quality 50 Index Fund, an open-ended index fund designed to track the Nifty500 Quality 50 Total Return Index (TRI). This new fund aims to provide investors with exposure to 50 high-quality companies selected from the broader Nifty 500 universe.

Key Features of the New Fund

• NFO Period: The New Fund Offer (NFO) is scheduled to run from August 21 to September 4.
• Minimum Investment: Investors can participate with a minimum investment of ₹100.00.
• Fund Management: The fund will be managed by experienced professionals Karthik Kumar and Hitesh Das.
• Index Methodology: The underlying Nifty500 Quality 50 index employs a rules-based approach to select companies, focusing on three key factors:
  1. Return on Equity (ROE)
  2. Financial Leverage
  3. Earnings Stability

Performance and Risk Profile

The Axis Nifty500 Quality 50 Index Fund offers an attractive proposition for investors seeking quality exposure in the Indian equity market:

• Historical Performance: Over the 15-year period ending July 2023, the underlying index has demonstrated strong performance:
  • Nifty500 Quality 50 TRI: 15.60% Compounded Annual Growth Rate (CAGR)
  • Nifty 50: 12.10% CAGR
• Risk Management: The index has shown lower volatility compared to the broader Nifty 50, potentially offering a more stable investment option.

Investment Strategy and Rebalancing

• Diversification: The fund provides diversified exposure across various market capitalizations and sectors.
• Rebalancing: The index, and consequently the fund, will undergo semi-annual rebalancing to maintain its focus on quality stocks.

Exit Load and Investor Considerations

• Exit Load: The fund carries an exit load of 0.25% if redeemed within 15 days of investment.
• Investment Horizon: Given its equity focus and index-tracking nature, investors should consider this fund for long-term wealth creation.

Conclusion

The Axis Nifty500 Quality 50 Index Fund presents an opportunity for investors to gain exposure to a curated list of quality stocks from the Nifty 500 universe. With its rules-based selection process and focus on financial stability and performance, this fund could be an attractive option for those looking to invest in a diversified portfolio of quality Indian equities. As always, investors are advised to consider their financial goals, risk tolerance, and consult with a financial advisor before making investment decisions.

The Enforcement Directorate (ED) has taken a significant step in its investigation of alleged front-running activities at Axis Mutual Fund, arresting Viresh Joshi, a fund manager and chief trader at the company. The arrest, made under anti-money laundering law, is related to activities that allegedly cheated investors out of approximately Rs 200.00 crore.

Legal Proceedings

A Prevention of Money Laundering Act (PMLA) court has remanded Joshi to ED custody until August 8. The investigation covers alleged illegal trading activities spanning from 2018 to 2021.

The Allegations

According to the ED, Joshi allegedly used confidential information about Axis Mutual Fund trades to execute pre-emptive trades through a Dubai terminal and mule accounts. This practice, known as front-running, is illegal and can generate substantial illicit gains at the expense of other investors.

Investigation Details

• The case originated from a Mumbai Police FIR.
• ED conducted multi-city searches across Delhi, Mumbai, Gurugram, Ludhiana, Ahmedabad, Bhavnagar, Bhuj, and Kolkata.
• The agency has frozen shares, mutual funds, and bank balances worth Rs 17.40 crore.
• The ED alleges that multiple traders and brokers were involved in the front-running scheme.
• Proceeds from the scheme were allegedly laundered through shell entities and bank accounts.

Impact on Axis Mutual Fund

This case has cast a shadow over Axis Mutual Fund, which manages assets worth over Rs 2.00 lakh crore. The alleged front-running activities, if proven, could have significant implications for the fund's reputation and investor trust.

Broader Implications

This case highlights the ongoing challenges in maintaining market integrity and protecting investor interests in the mutual fund industry. It underscores the importance of robust internal controls and regulatory oversight to prevent and detect such fraudulent activities.

As the investigation unfolds, it may lead to increased scrutiny of trading practices across the mutual fund industry, potentially resulting in stricter regulations and compliance measures to safeguard investor interests.