FIXED

INCOME
AUGUST 2020

6.42% 6.09% 5.75%

5.84% 3.15%
4.00%
10 yr G-Sec : Last 1 year CPI Inflation : Last 1 year Repo : Last 1 year

QUICK TAKE
• Long term G-Sec rates • Investment theme likely to • Selective allocations to AA • Actively managed short • Long term investors can
remain lackluster. Policy shift from capital gains to Credits may add accrual bond strategies continue to look to lock in long term
action to set the tone for accrual strategies. value to fixed income offer attractive risk reward rates in AAA Corporate
markets going forward. portfolios. opportunities. bond strategies at current
juncture.

Key Market Events Market View

• Government Bonds Lackluster: In the run up to the upcoming RBI policy, The RBI has up until now delivered rate cuts in excess of 175 bps. Transmission on
government bonds especially long tenor bonds have remained rather lackluster incremental borrowings have also happened as evident by MCLR cuts across
as concerns over the fiscal deficit and likely extension of the borrowing major public sector banks. The upcoming RBI policy is likely to focus less on rate
calendar. The government also auctioned a fresh 10-year G-Sec at 5.77% mid- cuts and more on the borrowing framework of the government and policy action.
cycle’ necessitated by the government’s massive borrowing program mainly Current market prices indicate; the markets are divided on whether RBI will cut
due to its enhanced spending requirement on account of COVID-19. The old 10 rates or maintain status quo. The RBI’s comments on banking liquidity will hold the
Year benchmark ended the month at 5.84%. key to market action over the next few months. Currently banking liquidity still
• Inflation Crosses 6% - Supply Shocks Drive Inflation Spike: CPI inflation for stands at Rs. 4-4.5 lakh crore surplus. In typical market conditions this quantum of
the month of June 2020 stood at 6.09% driven by spike in essential liquidity would take the RBI 18 months to drain.
commodities including food and The economy has seen a gradual opening of the economy. Early channel checks
diesel. Food inflation stood at 7% indicate large corporate facilities seeing 50-60% normalization. MSME has seen
with pulses and meat products 30-40% normalization. Furthermore, bank loan moratorium (Morat) numbers
seeing 16% inflation due to 10 YEAR G-SEC YIELD also show an encouraging trend. Q1 results of most financial institutions indicate
supply shortages. Core inflation
also saw a spike driven by supply
shortages. This near term spike is
5.84% ‘Morat’ numbers below 50%. Pessimism in the markets continues to remain
elevated and hence credit spreads remain elevated and curves remain steep.
As we see the end of the rate cut cycle, we believe much of the capital gains story
likely to subside as the economy across the fixed income space especially G-Sec/AAA assets has played out. From
re-opens and supply shocks normalize. peak to trough 3 Year AAA assets have rallied 350+bps. Going forward we believe
• India’ introduction into global debt benchmarks: In an attempt to improve the theme for markets will be the compression and accrual theme.
global access and marketability of Indian debt, the RBI and the Ministry of While the short end of the high quality curve has normalized, long bonds continue
Finance have embarked on a project to attract increased foreign participation to remain elevated. The 3x10 year on the AAA PSU curve shows a spread of
in domestic bonds. While the RBI has denoted select bond series as ‘fully 140bps, a decadal high. We believe the next leg of capital gains if any will stem from
accessible’ any likely inclusion will see an influx of ~US$20 billion into debt the curve normalizing post policy.
markets. As we stand today, FPI’s have utilized ~55% of their limits to invest in
domestic debt. There is also a compression theme evident on select AA names. Over the last
month the corporate AA curve has seen initial signs of compressions as fears of
• US$ Weakness – A Positive for EM’s & India: As investors look to riskier downgrades and defaults recede. From a portfolio standpoint, our portfolios will
assets, the demand for the US dollar, a traditional safe haven asset has look to capture opportunities in the AA space selectively where investment
diminished. A barrage of international positives including the Euro bloc’s mandates allow us to delve into AA names.
historic stimulus package and optimism around a global recovery have dented
the appeal for US assets. This is positive for countries like India. From an investment standpoint we believe opportunities in the AA space make for
an attractive accrual play for investors with risk appetite. However, investors must
• US GDP Shock & The Fed: Q2 (April – June 2020) real GDP in the US fell a remain vigilant and focus on portfolio granularity and liquidity while identifying
historic 32.9%, the deepest cut since records were kept. The US Fed investment opportunities in this space. Investors looking for short term parking
announced a status quo keeping in mind the need to stimulate a national solutions should continue to move up the yield curve to capture any capital gains
recovery and the impending US elections. The FOMC had a dovish tone to its as the curve normalizes.
statement but did not make any major policy changes, and most importantly,
signaled likely changes in forward guidance.
 Average Modified
AXIS CORPORATE DEBT FUND Maturity Duration
Why Invest?
A c t i v e l y
• The fund endeavors to capture opportunities by investing in best ideas across the corporate bond curve.
The fund will typically maintain duration range of 2-4 years and will have a high quality bias. Today we like 3.7years
2.9years
M a n a g e d
Corporate
Bonds with
steepness of 3 year cross 10 year corporate bonds and hence have allocated some portion of the portfolio in daily Liquidity
10 year corporate bonds. The fund has tactically added duration in its portfolio to benefit from the endeavors to
Yield to Macaulay generate stable
compression theme. Maturity * Duration returns by
• The current duration of the fund is 3.2 years. following a high

5.76 % 3.2years
quality & low-
risk strategy

Average Modified
Maturity Duration Why Invest? AXIS BANKING & PSU DEBT FUND
2.1years
1.9
years
Ta r g e t s t a b l e • The fund targets stable returns with high credit quality and liquidity predominantly through investment in
returns with high
credit quality and
Debt & Money Market Instruments issued by Banks, Public Financial Institutions (PFIs) and Public Sector
l i q u i d i t y. Undertakings (PSUs).
Yield to Macaulay Rigorous credit • Currently the fund is completely invested in AAA securities within the 2-3-year maturity bucket. The fund
Maturity * Duration evaluation.
Suitable for
will continue to invest in residual maturity bonds within this maturity bucket to take advantage of the
accrual opportunities in this space. The current duration of the fund is 2 years.
4.77
investors with a
% 2.0years
holding period of
3 years or more.

Average Modified
AXIS SHORT TERM FUND Maturity Duration Why Invest?

• The fund follows a high quality & low-risk strategy endeavoring to generate stable returns. It aims to
capture opportunities in the yield curve spreads in the short duration segment. 3.1years
2.5years
• The fund tracks corporate bond v/s Money market instruments spreads closely while making its allocations.
The portfolio allocation continues to be in 1-3 year corporate bonds, small allocation to long corporate Yield to Macaulay
bonds and money market instruments. Maturity * Duration
• The portfolio stance is expected to benefit from the compression in spreads in the short to medium term
segment of the curve on account of surplus liquidity and steepness. The corporate bonds exposure remains 5.11 % 2.6 years
mainly in higher rated instruments. The current duration of the fund is 2.6 years.

Average Modified
Maturity Duration
Why Invest?
To c a p t u r e
AXIS CREDIT RISK FUND
2.5years
2.1years
opportunities
across accrual,
credit and
• The fund is positioned to benefit from its core allocation in short term corporate bonds (Below AA+) i.e. in
the 2-3-year space. The current duration of the fund is 2.2 years. The focus of the fund is to capture the
duration space. credit spreads compression in the 1-4 year corporate bonds and also have a higher accrual.
Yield to Macaulay Monitors risk
by controlling • Given our market view on improved credit environment, improving corporate profitability and looking at a
Maturity * Duration the overall favorable risk reward perspective the fund will continue shifting its allocation to lower rated corporate
portfolio bonds (below AAA rating).
8.10 % 2.2
years
duration

Average Modified
Why Invest?
AXIS STRATEGIC BOND FUND Maturity Duration
to target stable
• The fund as part of its investment mandate aims to invest 60-70% in non-AAA bonds with overall portfolio
duration target range of 3- 4 years. The spreads in short non AAA corporate bonds of 150 bps over AAA 4.5years
3.4years
risk-return
profile
currently looks attractive from a risk reward basis and hence the fund is allocated assets to these securities
on an incremental basis. The portfolio design should help generate stable returns while bringing down Yield to Macaulay
volatility relative to a longer duration fund. Currently, the fund has duration of 3.6 years. Maturity * Duration

7.90 % 3.6years

Average Modified
Why Invest?
Maturity Duration
“Go Anywhere”
AXIS DYNAMIC BOND FUND
8.9
years
6.1years
a c t i v e l y
managed fund
following a
• The fund is positioned as long bond hold to maturity strategy investing in AAA corporate bonds. Given the
steepness in the curve the strategy aims to lock in rates at currently elevated yields to capture both accrual
Best Ideas and capital appreciation. Improving macro-economic conditions are likely to address such elevated spreads
approach and and normalize markets at the long end of the curve. Currently the fund’s duration is 6.5 years.
Yield to Macaulay can move
Maturity * Duration across the yield
curve

6.32 % 6.5
years
 Average Modified
AXIS ULTRA SHORT TERM FUND Maturity Duration
Why Invest?
• The fund is a short term solution to park funds in a portfolio which endeavors to offer a portfolio with lower
volatility and higher carry. The fund is ideal for investors with an investment horizon of 3-6 months. The fund 176 days
163 days
Short term
predominantly invests in a mix of corporate bonds (50%+) and money market instruments and try to capture solution for
higher carry by investing up to 30% in non AAA assets. The current duration of the fund is 179 days. Yield to Macaulay parking funds
Maturity * Duration

4.51 % 179 days

Average Modified
Maturity Duration
Why Invest?
Ta r g e t s t a b l e
AXIS TREASURY ADVANTAGE FUND
r e t u r n s w i t h • The portfolio is expected to benefit substantially from change in liquidity stance of RBI and opportunities in
354 days
322 days
high credit
quality and the short to medium duration corporate bond space. The portfolio's high maturity enables it to adequately
liquidity. hedge this risk. The fund is likely to benefit from the steepness of the rate curve of 3 months over 1 year. This
Rigorous credit portfolio is well positioned to benefit investors with an investment horizon of 6-12 months. The current
Yield to Macaulay evaluation.
Maturity * Duration duration of the fund is 347 Days
Suitable for
investors with a

4.18 % 347 days

holding period
of 3-6 months or
more.

Average Modified
AXIS MONEY MARKET FUND Maturity Duration Why Invest?

• The fund is a short term solution to park funds in a portfolio which endeavors to offer a portfolio with 100%
A1+ rated papers from the carefully crafted universe of money market instruments. This strategy is ideal for 183 days
176 days
Short term
solution for
days
investors with an investment horizon of 6 months to 1 year. The fund attempts to offer better risk reward parking funds
opportunity over other traditional alternatives in short term space. The current duration of the fund is 183 Yield to Macaulay
days. Maturity * Duration

3.74 % 183 days

*The yield to maturity given above is based on the portfolio of funds as on 31st July 2020. This should not be taken as an indication of the returns that maybe generated by the fund and the
securities bought by the fund may or may not be held till their respective maturities. The calculation is based on the invested corpus of the debt portfolio.For instruments with put/call
option, the put/call date has been taken as the maturity date.
 AT A GLANCE
Axis Axis Axis Money Axis Ultra Axis Axis Axis Banking Axis Short Axis Credit Axis Axis Axis Gilt
Overnight Liquid Market Short Term Treasury Corporate & PSU Debt Term Fund Risk Fund Dynamic Strategic Fund
Fund Fund Fund Fund Advantage Debt Fund Fund Bond Fund Bond Fund
Fund
Why Invest? Cash Cash Cash Short term For spare Capture Short term Actively To capture “Go To target To capture
Managem Managem Managem solution for cash in your opportunities investment Managed opportunities Anywhere” stable opportunities
ent ent ent parking Bank in high quality with high Short from credit Fund risk-return from
funds Account corporate quality Duration spread while following a profile investments in
bond portfolio Fund with managing risk Best Ideas government
Daily
portfolio Liquidity Approach securities

Type of Overnight Liquid Money Ultra Short Low Corporate Banking Short Credit Risk Dynamic Medium Gilt Fund
Fund Fund Market Fund Duration Duration Bond Fund and PSU Duration Fund Bond Duration
Scheme Fund Fund Fund Fund Fund
Average
3 days 40 days 183 days 176 days 354 days 3.7 years 2.1 years 3.1 years 2.5 years 8.9 years 4.5 years 12.1 years
Maturity
Macaulay
0 days 40 days 183 days 179 days 347 days 3.2 years 2 years 2.6 years 2.2 years 6.5 years 3.6 years 8.1 years
Duration
Modified
2 days 38 days 176 days 163 days 322 days 2.9 years 1.9 years 2.5 years 2.1 years 6.1 years 3.4 years 7.6 years
Duration
Yield to
3.17% 3.47% 3.74% 4.51% 4.18% 5.76% 4.77% 5.11% 8.10% 6.32% 7.90% 6.01%
Maturity*
Cash
3.17% 3.47% 3.75% 4.56% 4.22% 5.84% 4.80% 5.24% 8.24% 6.54% 7.92% 6.12%
Adjusted
Yield to
Maturity
(%)#
Asset Mix
Money
Market 100.0% 99.5% 100.0% 43.1% 44.6% 8.1% 5.4% 12.6% 4.0% 3.7% 1.9% 4.2%
Instruments
Corporate - 0.5% - 93.1% -
50.4% 49.4% 69.7% 66.8% 69.6% 83.4% 69.9%
Bond

G-Sec - - - - 4.1% 18.3% 1.5% 18.4% 14.0% 13.0% 20.4% 95.8%

PTC - - - 6.5% 1.9% 3.9% - 2.3% 12.4% - 7.9% -

Rating Mix
Sovereign
/AAA & $ 100.0% 100.0% 100.0% 80.7% 97.6% 100.0% 100.0% 100.0% 49.5% 100.0% 62.0% 100.0%
equivalent

AA+ - - - 5.9% - - - - - - 2.8% -

AA - - - 9.4% 2.4% - - - 26.4% - 21.8% -

AA- - - - 2.0% - - - - 16.1% - 10.0% -

A+ - - - - - - - - 8.0% - 3.3% -

A - - - - - - - - - - - -

A- - - - - - - - - - - - -

Below A - - - - - - - - - - - -

Load Structure
Exit Load NIL Graded NIL NIL NIL NIL NIL NIL If redeemed / NIL If redeemed / NIL
switched-out switched-out
Exit Load^ within 12 within 12
months - For months : - For
10% of 10% of
investment : investment :
Nil For Nil - For
remaining remaining
investment : investment :
1% If 1% If
redeemed/swi redeemed/swi
tched out tched out
after 12 after 12
months from months from
the date of the date of
allotment: Nil allotment: Nil.
$
AAA & Equivalent includes AAA/A1+-rated papers.
^Graded exit load for Axis Liquid fund as below:
Investor exit upon Subscription Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 onwards
Exit load as a % of redemption proceeds 0.0070% 0.0065% 0.0060% 0.0055% 0.0050% 0.0045% Nil
*The yield to maturity given above is based on the portfolio of funds as on 31st July 2020. This should not be taken as an indication of the returns that may be generated by the fund and the
securities bought by the fund may or may not be held till their respective maturities. The calculations are based on the invested corpus.
#
The cash adjusted Yield to Maturity given above is based on the portfolio of funds as on 31st July 2020 adjusted for cash & Net current assets.
 Riskometer Riskometer
Axis Dynamic Bond Fund Axis Strategic Bond Fund
(An open ended dynamic debt scheme investing ely Moderate Mod (An open-ended medium term debt scheme ely Moderate Mod
across duration) rat e
Hig rate investing in instruments such that the macaulay rat e
Hig rate
o de ow h ly duration of the portfolio is between 3 years to 4 o de ow h ly
This product is suitable for investors who are M L M L
seeking*: years)
• Optimal returns over medium to long term. This product is suitable for investors who are

High

High
Low

Low
seeking*:
• To g e n e r a t e s t a b l e r e t u r n s w h i l e
maintaining liquidity through active • Optimal returns over medium term.
management of a portfolio of debt and LOW HIGH • Investment in diversified portfolio of debt LOW HIGH
money market instruments. and money market securities to generate
Investors understand that their principal will be optimal risk adjusted returns while Investors understand that their principal will be
at moderate risk maintaining liquidity. at moderate risk

Riskometer Riskometer
Axis Short Term Fund (An open- Axis Credit Risk Fund (An
ended short term debt scheme investing in el y Moderate Mod open-ended debt scheme predominantly ely Moderate Mod
instruments such that the macaulay duration of rat e
Hig rate investing in AA and below rated corporate rat e
Hig rate
the portfolio is between 1 year to 3 years) o de ow h ly bonds (excluding AA+ rated corporate bonds) o de ow h ly
M L M L
This product is suitable for investors who are This product is suitable for investors who are
seeking*: seeking*:

High

High
Low

Low
• Regular income while maintaining liquidity • Stable returns in the short to medium term.
over short term. • Investment in debt and money market
• Investment in debt and money market LOW HIGH instruments across the yield curve and credit LOW HIGH
instruments. spectrum.
Investors understand that their principal will be Investors understand that their principal will be
at moderately low risk at moderate risk

Riskometer Riskometer
Axis Banking & PSU Debt Axis Gilt Fund (An open-ended debt
M scheme investing in government securities M
Fund (An open-ended debt scheme e rat
ely Moderate ode
Hig rate across maturity) e rat
ely Moderate ode
Hig rate
predominantly investing in debt instruments of d d
banks, public sector undertakings & public Mo Low h ly This product is suitable for investors who are Mo Low h ly
financial institutions) seeking*:
• Credit risk free returns over medium to long
High

High
This product is suitable for investors who are
Low

Low
seeking*: term.
• Regular income over short to medium term. • Investment mainly in government securities
LOW HIGH across maturities. LOW HIGH
• Investment in debt and money market
instruments issued by Banks, PFIs & PSUs. Investors understand that their principal will be Investors understand that their principal will be
at moderately low risk at moderate risk

Riskometer Riskometer
Axis Treasury Advantage Axis Liquid Fund (An open-ended
y Moderate Mod liquid scheme) y Moderate Mod
Fund (An open-ended low duration debt rat
el e
Hig rate This product is suitable for investors who are rat
el e
Hig rate
scheme investing in instruments such that the o de ow h ly o de ow h ly
Macaulay duration of the portfolio is between 6 M L seeking*: M L
to 12 months) • Regular income over short term.
High

High
This product is suitable for investors who are
Low

Low
• Investment in debt and money market
seeking*: instruments.
• Regular income over short term.
LOW HIGH LOW HIGH
• Investment in debt and money market
instruments. Investors understand that their principal will be Investors understand that their principal will be
at moderately low risk at low risk

Riskometer Riskometer
Axis Corporate Debt Fund Axis Ultra Short Term Fund
(An open ended debt scheme predominantly el y Moderate Mod (An open ended ultra-short term debt scheme ely Moderate Mod
investing in AA+ and above rated corporate rat e
Hig rate investing in instruments such that the Macaulay rat e
Hig rate
bonds) o de ow h ly duration of the portfolio is between 3 months o de ow h ly
M L M L
This product is suitable for investors who are and 6 months)
seeking*: This product is suitable for investors who are
High

High
Low

Low

• Regular income over short to medium term. seeking*:

• Predominantly investing in corporate debt. • Regular income over short term.
LOW HIGH • Investment in Debt & Money Market LOW HIGH
instruments such that the Macaulay duration
Investors understand that their principal will be of the portfolio is between 3 months - 6 Investors understand that their principal will be
at moderate risk months. at moderately low risk

Riskometer Riskometer
AXIS OVERNIGHT FUND AXIS MONEY MARKET
(An open ended debt scheme investing in y Moderate Mod y Moderate Mod
overnight securities) rat
el e
Hig rate
FUND (An open ended debt scheme rat
el e
Hig rate
de investing in money market instruments) de
This product is suitable for investors who are Mo Low h ly Mo Low h ly
seeking*: This product is suitable for investors who are
seeking*:
• Regular income with high levels of safety and
High

High
Low

Low

liquidity over short term. • Regular income over short term

• Investment in debt and money market • Investment in money market instruments
instruments with overnight maturity. with maturity up to one year.
LOW HIGH LOW HIGH
Investors understand that their principal will be Investors understand that their principal will be
at low risk at moderately low risk

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Axis MF
IFA
CONNECT

Toll Free Axis MF IFA CONNECT

EasyInvest 1800 221322 Easy SMS An app that goes beyond transactions Risk
http://online.axismf.com SMS HELP to 92120 10033
Additional Contact No. Download the app or Managed
Invest online without Transact and get folio
any prior registration 8108622211
details on the go
visit the web portal Products
(https://ifaconnect.axismf.com)

Data as on 31st July 2020. Source of data: Bloomberg, ACEMF

Disclaimer: Past performance may or may not be sustained in the future. Sector(s) / Stock(s) / Issuer(s) mentioned above are for the purpose of disclosure of the portfolio of the Scheme(s)
and should not be construed as recommendation. The fund manager(s) may or may not choose to hold the securities mentioned, from time to time. Investors are requested to consult their
financial, tax and other advisors before taking any investment decision(s). This document should not be construed as research report.
Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to ` 1 Lakh). Trustee: Axis Mutual
Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC) Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the
operation of the scheme.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.