Upcoming NFO: Axis Mutual Fund Files Draft Document for Dividend Yield Fund

Axis Mutual Fund has filed the draft Scheme Information Document for Axis Dividend Yield Fund. The open-ended equity scheme will invest mainly in shares and equity-related instruments of companies that pay dividends.  

Its stated objective is to generate long-term capital appreciation through an actively managed portfolio. 

Proposed Asset Allocation 

The scheme will allocate 80%-100% of its assets to equity and equity-related instruments. Dividend-yielding entities, including Real Estate Investment Trusts (REITs), will account for 65%-100% of total assets.  

The remaining equity allocation may include other companies, subject to a maximum of 35%. The fund can invest up to 20% of its assets in money market and liquid instruments, eligible mutual fund schemes, gold and silver exchange-traded funds (ETFs).  

Investments in Infrastructure Investment Trusts (InvITs) may account for up to 10% of net assets. 

Criteria for Selecting Stocks 

According to the draft document, stock selection will follow a bottom-up approach, with the fund considering companies' cash flows, business models, and financial fundamentals. The portfolio will not be restricted to a particular market capitalisation category or sector. 

Companies may qualify if they have paid dividends or carried out share buybacks in at least one of the preceding three financial years. Businesses expected to pay dividends in the future may also be considered. 

The scheme may use equity derivatives for hedging, portfolio rebalancing, and covered-call strategies, subject to applicable regulatory limits. 

Benchmark and Investment Terms 

The Nifty 500 Total Return Index (TRI) will be the scheme's primary benchmark. It tracks companies across large-cap, mid-cap, and small-cap categories. 

The fund will offer Direct and Regular plans, with Growth and Income Distribution cum Capital Withdrawal (IDCW) options. The minimum investment will be ₹100 during the New Fund Offer (NFO) and subsequent subscriptions.  

Additional investments can be made in multiples of ₹1, while the NFO unit price is set at ₹10. 

Exit Load and Risk 

Redemptions within 12 months will attract a 1% exit load on the portion exceeding 10% of the investment. No exit load will apply after 12 months. The NFO dates remain unspecified in the draft document. 

The scheme carries a high-risk classification, and the fund has not guaranteed that its investment objective will be achieved. 

Read More: Kotak Mahindra Mutual Fund Files Draft for Kotak Dynamic Asset Allocation Omni FoF! 

Conclusion  

The proposed fund will follow an active stock selection strategy and use the Nifty 500 TRI as its benchmark. Its investment objective is long-term capital appreciation. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.  

Mutual Fund Investments are subject to market risks, read all the related documents carefully before investing.