{"id":747,"date":"2019-07-29T09:49:22","date_gmt":"2019-07-29T09:49:22","guid":{"rendered":"http:\/\/blog.certifiedfinancialguardian.com\/?p=747"},"modified":"2019-07-30T06:05:26","modified_gmt":"2019-07-30T06:05:26","slug":"axis-money-market-fund-a-worthy-investment-proposition-for-short-term-needs","status":"publish","type":"post","link":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/2019\/07\/29\/axis-money-market-fund-a-worthy-investment-proposition-for-short-term-needs\/","title":{"rendered":"Axis Money Market Fund: A Worthy Investment Proposition For Short-Term Needs?"},"content":{"rendered":"\n

Axis Mutual Fund<\/a>, has launched an open-ended debt scheme<\/a>, Axis Money Market Fund (AMMF), that will invest in money market instruments predominantly.<\/p>\n\n\n\n

A money\nmarket fund is a category of debt scheme, emerged after the SEBI\nreclassification, that will invest in Money Market instruments (up to 100 %)\nhaving a maturity of up to 1 year. A money market fund generally invests in\nhigh quality (credit rating) debt instruments like treasury bills, repurchase\nagreements, commercial papers or cash equivalents and tax exempting debentures.<\/p>\n\n\n\n

They\nappear attractive, as they are highly liquid, has less risk because they invest\nin high credit\nquality instruments, have no exit load and provide better returns than a bank\nsavings account.<\/p>\n\n\n\n

Graph:\nIndicative Risk Return Matrix of Debt funds<\/em><\/strong><\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

(Source: PersonalFN Research)<\/p>\n\n\n\n

On the risk-return spectrum, money market funds are placed between low\nduration funds and floater funds. Since they usually hold instruments up to one\nyear, may get affected by fluctuations in interest rate.  And hence carries a moderately low amount of\ninvestment risk.<\/p>\n\n\n\n

Hence,\nthey are suitable for investors who are saving for an investment goal of up to\none year (house renovation, planning a vacation, etc.), want to build a\ncontingency fund or want to save if unsure about where to invest for a year.<\/p>\n\n\n\n

Table\n1: Details of Axis Money Market Fund<\/em><\/strong><\/p>\n\n\n\n

\n
\n Type<\/strong>\n <\/td>An open-ended debt scheme investing in money market securities<\/td>\n Category<\/strong>\n <\/td>\nMoney Market Fund\n <\/td><\/tr>
\n Investment Objective<\/strong>\n <\/td>\n To generate regular income through investment in a portfolio comprising of money market instruments.

\n However, there can be no assurance that the investment objective of the Scheme will be achieved.\n <\/td><\/tr>
\n Min. Investment<\/strong>\n <\/td>\n Rs 5,000 and in multiples of Re 1 thereafter\n <\/td>\n Face Value<\/strong>\n <\/td>\nRs 1,000 per unit\n <\/td><\/tr>
\n Plans <\/strong>\n <\/td>\n \u2022 Direct*\n\t
\n \u2022 Regular

* Default option<\/em>\n <\/td>		\n Options<\/strong>\n <\/td>
    \n\t
  • Growth*<\/li>\n\t
  • Dividend\n\t
      \n\t\t
    • Re-investment*<\/li>\n\t\t
    • Pay-out <\/li>\n\t\t<\/ul><\/li>\n\t<\/ul>\n * Default option<\/em>\n <\/td><\/tr>
\n Entry Load<\/strong>\n <\/td>\nNot Applicable\n <\/td>\n Exit Load<\/strong>\n <\/td>Nil\n <\/td><\/tr>
\n Fund Manager<\/strong>\n <\/td>\nMr Devang Shah and Mr Aditya Pagaria\n <\/td>\n Benchmark Index<\/strong>\n <\/td>\n NIFTY Money Market Index\n <\/td><\/tr>
\n Issue Opens :<\/strong>\n <\/td>\n \n July 26, 2019\n <\/td>\n \n Issue Closes :<\/strong>\n <\/td>\n August 01, 2019<\/td><\/tr><\/tbody><\/table><\/center>\n\n\n\n

(Source: Scheme Information Document<\/a>)<\/p>\n\n\n\n

How will the <\/strong>Axis Money Market Fund<\/strong> allocate its assets?<\/strong><\/p>\n\n\n\n

Under normal circumstances, the scheme\u2019s asset allocation<\/a> pattern will be as under:<\/p>\n\n\n\n

Table 2: AMMF\u2019s Asset Allocation<\/em><\/strong><\/p>\n\n\n\n

\n \n \n \n
Instruments<\/strong><\/td>\n Indicative allocation (% of net Assets) <\/strong><\/td>\n Risk Profile<\/strong><\/td>\n <\/tr>\n
Minimum<\/strong><\/td>\n Maximum<\/strong><\/td>\n High\/ Medium\/ Low)<\/strong><\/td>\n <\/tr>\n

Money Market instruments <\/td>\n

0<\/td>\n 100<\/td>\n Low<\/td>\n <\/tr>\n<\/table><\/center>\n\n\n\n

The\nScheme will not have any exposure to debt derivatives, securitized debt, REITs\nand INViTs and foreign securities.

\nThe AMC shall ensure that the total exposure of the Scheme in a particular sector (excluding investments in Bank CDs, Triparty Repo, G-Secs, T-Bills short term deposits of scheduled commercial banks and AAA-rated securities issued by Public Financial Institutions and Public Sector Banks) does not exceed 25% of the net assets of the Scheme. Also, an additional exposure to financial services sector (over and above the existing 25%) not exceeding 15% of the net assets of the Scheme will be allowed by way of increase in exposure to HFCs only, subject to the condition that such securities issued by HFCs are rated AA and above and these HFCs are registered with National Housing Bank (NHB). However, the total investment in HFCs cannot exceed 25% of the net assets of the Scheme.\n<\/p>\n\n\n\n

(Source: Scheme Information Document<\/a>)<\/p>\n\n\n\n

What will be the Investment Strategy?<\/strong><\/p>\n\n\n\n

The net assets of the Axis Money Market\nFund will be invested in money market instruments. The Scheme will seek to\noptimize the risk-return proposition for the benefit of investors.<\/p>\n\n\n\n

The investment process will focus on\nmacro-economic research, credit risk and liquidity management. The Scheme will\nmaintain a judicious mix of short term and medium-term instruments based on the\nmandates of the Scheme. <\/p>\n\n\n\n

As part of credit risk assessment, the\nScheme will also apply its credit evaluation process besides taking guidance\nfrom ratings of rating agencies. In order to maintain liquidity, the Scheme\nwill maintain a reasonable proportion of the Scheme’s investments in relatively\nliquid investments.<\/p>\n\n\n\n

Who\nwill manage the Axis Money Market Fund?<\/strong><\/p>\n\n\n\n

The Axis Money Market Fund will be managed\nby Mr Devang Shah and Mr Aditya Pagaria.<\/p>\n\n\n\n

Mr Devang Shah<\/strong> is currently the Fund Manager at Axis Asset Management Company Ltd. He holds a bachelor’s degree in Commerce from the University of Mumbai, is a Chartered Accountant (ACA) and is well experienced in Fixed Income research. <\/p>\n\n\n\n

Before joining, Axis AMC on October 2012, he was a Fund Manager at ICICI Prudential Asset Management Company Limited for 4.5 years. Prior to that, he worked as an Analyst at Deutsche Asset Management (India) Pvt. Ltd for two years and as an Assistant Manager at Pricewaterhouse Coopers for two years. <\/p>\n\n\n\n

Some of the other schemes he manages are Axis Strategic Bond<\/a>, Axis Short Term Fund<\/a>, Axis Gilt Fund<\/a>, Axis Dynamic Bond Fund<\/a>, Axis Liquid Fund<\/a>, Axis Arbitrage Fund<\/a>, Axis Gold Fund<\/a>, Axis Gold ETF<\/a>, Axis Treasury Advantage Fund<\/a>, Axis Regular Saver Fund<\/a>, Axis Credit Risk Fund<\/a>, Axis Hybrid Fund – Series, Axis Fixed Term Plans and Axis Corporate Debt Fund<\/a>.<\/p>\n\n\n\n

Mr Aditya Pagaria<\/strong> has done his Bachelor\u2019s in Management Studies and holds a Post Graduate Diploma in Business Management with experience in Fixed income research. <\/p>\n\n\n\n

Before joining Axis AMC in August 2016 as a Fund Manager, he was associated with ICICI Prudential Asset Management Company Ltd. as well.<\/p>\n\n\n\n

Currently, at the Axis AMC, some of the other schemes that Mr Aditya Pagaria manages include Axis Treasury Advantage Fund<\/a>, Axis Liquid Fund<\/a>, Axis Banking & PSU Debt Fund<\/a>, Axis Equity Advantage Fund – Series 1<\/a>, Axis Equity Advantage Fund Series 2<\/a>, Axis Ultra Short Term Fund<\/a> and Axis Overnight Fund<\/a>.<\/p>\n\n\n\n

The\noutlook for Axis Money Market Fund:<\/strong><\/p>\n\n\n\n

The money markets in India essentially\nconsist of the call money market (i.e. market for overnight and term money\nbetween banks and institutions), repo transactions (temporary sale with an agreement\nto buy back the securities at a future date at a specified price), commercial\npapers (CPs, short term unsecured promissory notes, generally issued by\ncorporates), certificate of deposits (CDs, issued by banks) and Treasury Bills\n(issued by RBI). <\/p>\n\n\n\n

In a predominantly institutional market,\nthe key money market players are banks, financial institutions, insurance\ncompanies, mutual funds, primary dealers and corporates. In the money market,\nactivity levels of the Government and nongovernment debt vary from time to\ntime. Instruments that comprise a major portion of money market activity including\nbut not limited to:<\/p>\n\n\n\n