The rise in the popularity of social media handles has tremendously contributed to fake entities that scam the public. One such recent example is the Axis mutual fund scam. The scammers have been actively using Axis bank’s name and logo to dupe investors. The alarming rise of digital financial crimes has created a tense atmosphere in the mutual fund investment market. So what’s next? You may ask. Is Axis mutual fund safe? Should you invest in it or not? In this article, we will throw light on all such queries.
Axis Mutual Fund Scam
Axis Mutual Funds were on the headlines due to two infamous scams. These are-
1. Fake Entities duping people using the trademark and logo of Axis Mutual Funds
Here, you will get a quick synopsis of this fraudster event. A few days ago, Axis Mutual Fund shared a long list of fake handles. They were deceiving investors through fake handles on social media apps like Telegram and Facebook. They used the credentials of the company and sought deposits of money in “mutual funds” from the public. Also, they portrayed these investments as profitable. They used the unauthorized trademark and logo of Axis Mutual Fund to win the trust of the public. After seeing the rise of such cases, the company has warned the public to be cautious of such fake channels.
Axis mutual funds released a list of fake telegram channels that use their name to deceive the investors-
|Name of Fake Telegram Channel||Number of Members or Subscribers|
However, the list is not limited to this. There may be many other fake handles that may be scamming investors.
Axis mutual funds notified that it operates the following official and authentic handles-
- YouTube: Axis Mutual Fund
- Facebook: Axis Mutual Fund- Home
- Twitter: @AxisMutualFund
- Quora: Axis Mutual fund
- WhatsApp Servicing: (+91) 7506771113
Lastly, the company stated that any of its representatives or employees won’t be responsible for any loss related to the scams. Therefore, before investing in Axis Mutual Fund or any other fund, ensure its authenticity before transferring your hard-earned money!
2. Front-running Case
The SEBI barred 20 employees of Axis Mutual fund including Viresh Joshi (former fund manager) from accessing the security markets of India. Because of alleged front-running of funds’ trade. During the investigation, SEBI concluded that the alleged individuals wrongly earned approx. Rs.30 crores from front-running activities from September 2021 to March 2022. (In the stock market, front-running refers to the practice of dealing with advanced information provided by brokers and analysts before informing their clients. Usually, fund managers use it for their gains).
Is Axis Mutual Funds safe?
Coming to the second part of this article. After going through the list of fake entities, the current question in your mind would be “Is Axis Mutual Funds safe?” Well, to get a definite answer we need to analyze certain factors.
- Avoid Regulated Companies– Most of the schemes of Axis Mutual fund never consists any public sector enterprises. Why? You may ask. Due to multiple reasons like corporate governance issues or non-compliance with SEBI regulations etc.
- Investments in High Compounders– Compounders are the growth metrics of a company based on revenue, operating profit, and earnings per share. Axis mutual funds invest in companies (Like TCS, Infosys, etc.) having high CAGR to gain maximum benefits for you.
- Stable Cash Flow– It refers to the surplus cash that a business generates after paying off all the capital and operating expenses. The positive operating cash flows describe the sustainability of a business. Therefore, the long-term equity fund portfolio of Axis consists of companies having strong free cash flows. Such as TCS, Infosys, Nestle, Dr. Reddy’s Laboratories, Torrent Power, etc.
Recently the Axis Bluechip Fund Growth was marked as quite successful. Because of its existence over a decade and profitable annual returns. Axis has a stable cash flow for the backup. Also, the asset size of the fund determines the safety of the investment.
Asset Size of Axis Mutual Funds Schemes
Let me give you a quick overview of the asset size of various schemes of Axis Mutual Funds-
|Axis Mutual Fund Scheme Name||Asset Size in INR (Crore)|
|Axis Bluechip Fund Growth||33,584.04|
|Axis Liquid Fund Growth||29,631.79|
|Axis Liquid Fund Retail Growth||29,631.79|
|Axis Long-Term Equity Fund Growth||28,864.74|
|Axis Midcap Fund Growth||18,756.06|
|Axis Focused 25 Fund Growth||15,360.69|
|Axis Banking & PSU Debt Fund Growth||13,838.64|
|Axis Overnight Fund Regular Growth||12,096.28|
|Axis Small Cap Fund Regular Growth||11,499.50|
|Axis Flexi Cap Fund Regular Growth||10,269.18|
Axis mutual funds are safe and perfect for your long-term investment goals like retirement planning, or wealth creation. Also, some of its schemes may help you to enjoy tax benefits. For example, with Axis’s long-term equity fund, you can plan your taxes under section 80C of the income tax act, of 1961. The fund managers of the same will guide you to make wise investment decisions.
However, you must always perform proper due diligence from the authentic website of Axis before investing. Always verify the documents and take guidance from experienced players in this field.
Why were Axis Mutual Funds falling?
Before proceeding further, have a brief look at the data from the last two years-
|Axis Mutual Fund Scheme Name||Benchmark Returns for 1-year (%)||Actual Returns from 1-year (%)|
|Axis Midcap Fund||12.36||7.15|
|Axis Flexi Cap Fund||10.11||0.89|
|Axis Bluechip Fund||9.41||0.59|
|Axis Long-Term Equity fund||10.11||-2.59|
|Axis Focused 25 Fund||10.11||-3.38|
From the data given above, it is visible that you won’t get the returns as expected. Axis Mutual Funds is striving hard through a sour phase. Consequently, it leads to its underperformance. As you can see, the popular schemes of Axis Mutual Funds are fading away. The primary reasons for this are-
- Market Uncertainty: As you know mutual funds are linked to the market. Therefore, they get affected whenever the market goes down. Also, mutual funds go through a broad range of price fluctuations. That’s exactly what is happening now.
- Axis mutual fund scam: Apart from the gloomy market conditions, the Axis mutual fund scam has immensely contributed to the fall of Axis mutual funds. Customers and investors lose their trust in a company due to such scams.
- Performance of Fund managers: They are the backbone of mutual funds. They are responsible for handling the market timing, stock picking, and prediction of interest rates. Therefore, the consistent performance of fund managers is crucial to get good returns from mutual funds. But, unfortunately, the managers of Axis Mutual Fund were hit with a big blow of front-running allegations. This severely damaged the reputation of the company due to which its popularity fainted.
Mutual fund investments are subject to market risks. Take proper guidance if you need a basic understanding of making proper investments in Axis mutual funds.