Two years have passed since the front-running scandal shook Axis Mutual Fund. However, the fund house is still struggling to regain its footing since allegations of front-running and price rigging surfaced in May 2022.
Following Securities Exchange Board of India's (SEBI's) interim order, which highlighted irregularities within the fund house, a wave of top management exits ensued.
Chandresh Nigam, the former CEO and MD, stepped down, paving the way for B Gopakumar to assume leadership.
In a bid to restore investor confidence, Ashish Gupta was appointed as the new Chief Investment Officer (CIO). However, subsequent departures, including those of head of equities Jinesh Gopani and most recently, Chief Business Officer Raghav Iyengar, continue to destabilise the organisation.
Despite management reshuffling, Axis Mutual Fund's equity schemes have failed to stage a comeback.
Data reveals consistent underperformance since the scandal emerged, with many schemes trailing behind their benchmarks.
Top Axis equity schemes, including Axis ELSS Fund, Axis Focus 25, Axis Mid Cap, and Axis Blue Chip, have failed to stage a comeback.
Here's a look at returns of some of the Axis Mutual Fund schemes:
Axis ELSS Tax Saver Fund
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
| Scheme Returns | 3.71% | 15.86% | 21.50% | 25.60% | -11.23% | 22.89% |
| Benchmark Returns | -1.80% | 8.98% | 18.41% | 31.63% | 4.77% | 26.55% |
Axis Small Cap Fund
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
| Scheme Returns | -7.89% | 20.84% | 24.58% | 60.71% | 45.52 | 28.58 |
| Benchmark Returns | -23.62% | -8.44% | 27.89% | 59.11% | 66.66 | 29.91 |
Axis Midcap Fund
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
| Scheme Returns | 4.59% | 12.80% | 27.77% | 41.78% | 4.11% | 35.57% |
| Benchmark Returns | -12.94% | 0.88% | 26.29% | 48.65% | -1.02% | 47.26% |
Axis Focused 25 Fund
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
| Scheme Returns | 1.83% | 16.20% | 22.48% | 25.35% | -13.56% | 18.36% |
| Benchmark Returns | -1.80% | 8.98% | 18.41% | 31.63% | 4.77% | 26.55% |
Axis Bluechip Fund
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
| Scheme Returns | 8.01% | 19.97% | 21.19% | 22.11% | -4.62% | 18.54% |
| Benchmark Returns | 2.61% | 10.92% | 16.84% | 26.53% | 6.03% | 23.23% |
(Source: Value Research)
Before 2021, Axis equity schemes were chart-toppers, but the tide turned post-2021.
Analysing the numbers, it's evident that the schemes have struggled to maintain their previous performance levels.
From 2018 to 2020, schemes consistently outperformed benchmarks, but a notable decline is observed from 2021 onwards, particularly in 2022.
The fund house has also experienced a decline in inflows, reflecting a loss of investor trust in the aftermath of the scandal.
According to data from Morningstar India, for the quarter ended March 2022, which was right before the news of front-running at Axis became public, the fund house garnered inflows worth ₹6,331 crore and stood on the second spot among fund houses that saw highest inflows in that quarter.
In Q4 of financial year 2022-23, Axis Mutual Fund saw outflows worth ₹9,114 crore and stood in the fund houses that saw the most outflows in that quarter.
In the second quarter of 2023-24, which is the quarter ended September, 2023, Axis Mutual Fund saw outflows worth ₹9,543 crore.
In the quarter ending December 2023, the third quarter of financial year 2023-24, the fund house witnessed outflows of ₹4,138 crore, again ranking second in the list of fund houses experiencing the highest outflows.
Despite regulatory actions and SEBI’s interim order, the legal battle surrounding the front-running case remains ongoing.
Viresh Joshi's challenge to SEBI's interim order in the Securities Appellate Tribunal is ongoing.
