Axis Bluechip Fund: Is It Worth Your Investment?

The Axis Bluechip Fund is a mutual fund scheme that invests in large-cap companies, aiming for long-term capital growth. It has been a good investment option for its investors over the years, outperforming its benchmark in 8 out of 10 calendar years. While the fund has underperformed in recent years, its long-term track record remains strong, and it has delivered well over different market cycles. The fund has a diversified portfolio, investing predominantly in equity and equity-related instruments of large-cap companies, with a focus on stability and reliability. It is an open-ended fund, allowing investors to buy or sell units at any time. With its strong historical performance and conservative investment strategy, the Axis Bluechip Fund can be a promising addition to an investor's portfolio for those seeking long-term wealth creation.

Historical performance

The historical performance of the Axis Bluechip Fund has been impressive, with the fund consistently beating its benchmark and peers over the years. The fund has delivered a compound annual growth rate (CAGR) of over 15% over the past 10 years, outperforming its category in most years.

In terms of specific years, the fund has shown strong performance, especially from 2017 to 2020, with its assets under management (AUM) growing multifold during these years. In 2014, and from 2017 to 2020, the fund gave amazing returns. However, in 2021, the fund underperformed compared to its benchmark and category, and in 2022, it gave negative returns while the benchmark and category gave positive returns.

Looking at longer time frames, the fund has delivered returns of 12.14%, 15.30%, and 14.64% for 5-year, 7-year, and 10-year periods, respectively, which is considered a fair performance.

The Axis Bluechip Fund has also demonstrated better downside protection compared to its peers. For example, in March 2020, when large-cap funds corrected by around 26% on average, the Axis Bluechip Fund limited its fall to 18%. This ability to curtail downturns better than its peers has been a consistent feature of the fund.

The fund's Net Asset Value (NAV) has also reflected its strong performance. The NAV of the Direct Growth Plan reached its peak of ₹54.30 in October 2021, and the fund's current NAV (as of 2nd November 2023) is ₹45.3800.

Overall, the historical performance of the Axis Bluechip Fund has been commendable, with consistent outperformance over its peers and benchmark, especially over the long term.

Risk and return parameters

The Axis Bluechip Fund has been described as a "very high-risk" investment option by SEBI's Riskometer. However, it is important to note that this fund has consistently outperformed its benchmark and peers over the long term. While there was a period of underperformance in 2021 and 2022, the fund has since recovered and continues to be one of the best-performing large-cap funds in the market.

When analysing the risk-return parameters, we can see that the fund lags in the category of mean returns, ranking second from the bottom. However, the fund manager has successfully kept volatility in check, as evidenced by a well-controlled standard deviation and beta. The Sharpe ratio, which measures the return of an investment compared to its risk, is low, and the fund has a negative alpha.

The Axis Bluechip Fund has a diversified portfolio, investing predominantly in large-cap stocks of well-known companies such as Infosys Ltd., Bajaj Finance Ltd., HDFC Bank Ltd., and TCS Ltd. The fund's strategy is considered conservative, with a focus on large-cap stocks and debt instruments.

Over the past 10 years, the fund has delivered a CAGR of over 15%, outperforming its peers and the large-cap category average. This strong performance is reflected in its long-term returns, with 12.14%, 15.30%, and 14.64% returns for 5-year, 7-year, and 10-year investment horizons, respectively.

In terms of risk management, the fund has demonstrated an ability to curtail downfalls better than its peers in the large-cap category. During the market crash in March 2020, when large-cap funds corrected by around 26% on average, the Axis Bluechip Fund limited its fall to 18%. This resilience is a testament to the fund manager's ability to navigate volatile market conditions.

Overall, while the Axis Bluechip Fund carries a high-risk profile, its strong historical performance, stability, and reliability make it a promising investment option for those seeking long-term wealth creation.

Portfolio concentration

The fund's top 10 holdings comprise around 60% of its portfolio, which is higher than that of other funds in its category. This indicates a more focused allocation of capital to the fund manager's top stock picks. The fund manager is willing to actively manage cash levels, reducing exposure during market downturns, as demonstrated by the fund's cash allocation before the market crash in March 2020.

The Axis Bluechip Fund's sector allocation can deviate from the category average due to its bottom-up approach to stock selection. For instance, its allocation to financial services companies was 13% in September 2021, compared to the category average of 7%. The fund also includes unique bets, such as Avenue Supermarts, Bajaj Finance, and TCS, which are either absent or have lower allocations in other large-cap funds.

In terms of market capitalisation, the fund primarily invests in large-cap stocks, with some exposure to mid-cap stocks. As of September 2021, 85.17% of the fund was invested in large-cap stocks, while 1.26% was in mid-cap stocks. The fund typically maintains a higher allocation to large-cap stocks than its peers, focusing on established companies with strong track records.

Overall, the Axis Bluechip Fund's portfolio concentration strategy involves a focused selection of stocks, a higher weighting towards the top holdings, and a preference for large-cap companies, with some mid-cap exposure. This approach has contributed to the fund's consistent performance and ability to curtail downturns better than its peers.

Investment options

The Axis Bluechip Fund is a mutual fund scheme that predominantly invests in large-cap companies, aiming for long-term capital growth. It is an open-ended fund, meaning investors can buy or sell units at any time, and is part of the Axis Mutual Fund House.

The fund has a very high risk profile, but has consistently outperformed its benchmark and peers over the long term, making it a good option for investors seeking long-term wealth creation.

However, it is important to note that the fund has underperformed in recent years, specifically in 2021 and 2022, which has caused concern for some investors. Despite this, the fund's long-term track record remains strong, and it is still considered a good investment option for those looking for an actively-managed fund in the large-cap space.

For those looking to invest, there are two main options: the Regular Growth Plan and the Direct Growth Plan. The Regular Growth Plan involves investing through intermediaries, such as financial advisors, and incurs various charges such as entry and exit loads and transaction fees. On the other hand, the Direct Growth Plan can be accessed directly through the official app, without the need for intermediaries. This option offers investors more control over their investments and the potential for better returns.

When considering investment options, it is important to assess your financial goals, risk tolerance, and investment horizon. The Axis Bluechip Fund may be suitable for those seeking long-term capital growth through investment in large-cap companies, but it is crucial to remember that past performance does not guarantee future results, and diversification across different investment options is usually recommended to manage risk.

Additionally, investors should be aware of the tax implications of investing in mutual funds. In India, mutual fund units held for more than a year are taxed differently from those held for less than a year, and dividend income may also be subject to taxation.

Overall, the Axis Bluechip Fund can be a promising investment option, particularly for those seeking an actively-managed fund with a strong long-term track record. However, investors should carefully consider their financial situation and goals before investing and remember that mutual funds, especially those with high-risk profiles, may not be suitable for everyone.

Taxation

If you sell your mutual fund units after holding them for more than a year, long-term capital gains tax will apply. The current tax rate is 12.5% if your total long-term capital gains exceed 1.25 lakh. If you sell your units before holding them for a year, short-term capital gains tax will apply. The current tax rate is 20%. It is important to note that any cess or surcharge is not included in the tax rates mentioned. Additionally, dividends are added to the income of the investors and taxed according to their respective tax slabs. If an investor's dividend income exceeds Rs. 5,000 in a financial year, the fund house also deducts a TDS of 10% before distributing the dividend.

Frequently asked questions