Axis Bluechip Fund: Delivering Robust Long Term Returns

May 05, 2022

Listen to Axis Bluechip Fund: Delivering Robust Long Term Returns

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The RBI's off-cycle move to hike interest rates came as a surprise to investors in the equity market. The S&P BSE Sensex declined by around 1,307 points in a day on May 04, 2022, as RBI raised the repo rate by 40 basis points to tame inflation. It is likely that RBI will announce further rate hikes in the current financial year.

Large-sized companies are better poised to handle a higher interest rate environment compared to mid and small-sized counterparts. Therefore, Large-cap Funds can be expected to perform well in the near future.

Axis Bluechip Fund is a Large-cap Fund that has outscored its peers and the benchmark over the long term and rewarded investors with superior risk-adjusted returns.

Graph 1: Growth of Rs 10,000 if invested in Axis Bluechip Fund 5 years ago

With a corpus of Rs 35,702 crore, Axis Bluechip Fund is the largest scheme in the Large-cap Fund category. The fund has gained popularity among investors with its extraordinary performance registered over the last few years. Axis Bluechip Fund selects stocks based on their ability to grow earnings on a sustainable basis from a medium-term perspective. In the market crash of 2020, wherein various Large-cap Funds found it difficult to keep pace with the indices, Axis Bluechip Fund managed to outperform the benchmark S&P BSE 100 - TRI and the category peers by a significant margin. However, the fund couldn’t participate the recent bull phase that was largely driven by momentum stocks. Nonetheless, in the last 5 years, Axis Bluechip Fund has generated returns at a CAGR of about 16% as compared to the 14% CAGR delivered by the benchmark S&P BSE 100 – TRI index, thus rewarding investors with an alpha of about 2 percentage points.

Graph 1
Past performance is not an indicator of future returns
Data as on May 02, 2022
(Source: ACE MF)
 

Table: Axis Bluechip Fund's performance vis-á-vis category peers

Scheme Name Corpus (Cr.) 1 Year 2 Year 3 Year 5 Year 7 Year Std Dev Sharpe
IDBI India Top 100 Equity Fund 586 21.93 33.28 18.79 12.70 12.00 20.34 0.22
Canara Rob Bluechip Equity Fund 6,647 14.83 29.76 18.67 15.62 14.09 19.45 0.22
Kotak Bluechip Fund 4,132 16.72 33.22 16.61 13.58 12.86 21.61 0.19
Baroda BNP Paribas Large Cap Fund 1,306 15.92 27.78 16.51 13.16 12.19 19.24 0.20
Mahindra Manulife Large Cap Pragati Yojana 145 18.25 33.04 16.45 -- -- 20.85 0.18
UTI Mastershare 9,853 17.16 32.36 16.30 13.64 11.99 20.77 0.19
Axis Bluechip Fund 35,702 12.13 24.80 15.66 15.97 13.91 18.31 0.20
Edelweiss Large Cap Fund 327 16.52 31.08 15.52 13.91 12.23 20.85 0.18
SBI BlueChip Fund 31,934 16.65 33.01 15.51 12.41 12.59 22.19 0.17
LIC MF Large Cap Fund 674 17.21 28.11 15.51 12.82 11.06 19.71 0.18
S&P BSE 100 - TRI 19.64 34.23 15.44 14.03 12.70 22.05 0.17
Returns are point to point and in %, calculated using the Direct Plan-Growth option. Those depicted over 1-Yr are compounded annualised.
Data as on May 02, 2022
(Source: ACE MF)
*Please note, this table only represents the best performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.
 

In terms of performance, Axis Bluechip Fund has done exceedingly well over the long term. The fund focuses on investing in high-quality stocks in the large-cap segment, which has helped it to perform exceedingly well in the last few years. Even though Axis Bluechip Fund has significantly trailed the benchmark S&P BSE 100 - TRI and many of its peers in the last 1-year and 2-year period, over the longer time period of 5-years and 7-years, the fund stands among the category toppers and has outpaced the benchmark.

While managing Axis Bluechip Fund, the fund manager aims to outperform the benchmark while undertaking risk that is lower than the benchmark. Accordingly, the volatility registered by the fund is the lowest in the large-cap category. Moreover, the Sharpe Ratio of the fund is currently among the best in the category and significantly ahead of its benchmark.

Axis Bluechip Fund: Delivering Robust Long Term Returns
(Image Source: www.freepik.com - photo created by jcomp)
 

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Investment strategy of Axis Bluechip Fund

Categorised as Large-cap Fund, Axis Bluechip Fund is mandated to hold at least 80% allocation in large-caps, while the remaining can be in mid and small-caps. However, the fund maintains almost zero exposure to mid and small-caps. Axis Bluechip Fund is a growth-oriented large-cap biased fund that primarily follows the bottom-up approach to stock picking, along with some tactical and structural calls to benefit from price corrections.

Belonging to a process-driven fund house, Axis Bluechip Fund focuses on investing in high-quality stocks in the large-cap segment having the potential to grow cash flows over the medium to long term. Its portfolio is built utilising the bottom-up approach, focusing on the appreciation potential of individual stocks from a fundamental perspective. It employs a 'Fair value-based' research process to analyse the growth potential of stocks. The stocks are carefully selected to include companies having robust business models and enjoying sustainable competitive advantage as compared to their competitors.

Unlike its peers that hold 45-50 stocks, Axis Bluechip Fund holds a compact portfolio of just around 30-35 stocks. Rather than adding too many names, the fund management believes in staying with known quality names and look for corporate governance, strong management, scalable, and secular business model where they can invest for at least 3 to 5 years.

Graph 2: Top portfolio holdings in Axis Bluechip Fund

Graph 2 Graph 2
Holding in (%) as of March 31, 2022
(Source: ACE MF)
 

As of March 31, 2022, Axis Bluechip Fund held a compact portfolio of 39 stocks. Names like Infosys, Bajaj Finance, ICICI Bank, HDFC Bank, and TCS currently figure among the top holdings in the fund's portfolio, with an allocation in the range of 7% to 10% each. Avenue Supermarts, Kotak Mahindra Bank, Reliance Industries, Divi's Laboratories, Bharti Airtel, etc., stood among the other top holdings in the fund's portfolio. It also invests some portion in Derivatives (Futures) for hedging purposes.

In the last one year, Axis Bluechip Fund benefitted from its holdings in Infosys, Bajaj Finance, Avenue Supermarts, ICICI Bank, Reliance Industries,TCS, among others, while it lost some value in Motherson Sumi Systems, HDFC Ltd., HDFC Bank, Ultratech Cement, etc.

Though Axis Bluechip Fund's portfolio is skewed towards cyclicals, it is fairly diversified towards defensives. Around 37.4% of the fund's portfolio is exposed to Banking and Finance stocks, followed by Infotech, Retail, Pharma, and Consumption adding another 39% to its portfolio allocation. The remaining part of the portfolio is diversified across Petroleum, Cement, Telecom, Engineering, among others.

 

Suitability

Axis Bluechip Fund's focus on quality stocks enables it to stand strong during depressed market conditions, as witnessed during the market crash of 2020. Even though the fund has remarkably trailed the benchmark and the category average in the current bull phase, it has the potential to bounce back and reward investors with superior gains.

As the fund remains benchmark agnostic, it avoids benchmarking the index. It focuses on high conviction stock ideas, where the investments are made typically at the conviction of the fund manager, irrespective of their weightage in the index. Certainly, the performance of the fund may deviate significantly from the benchmark.

Axis Bluechip Fund is suitable for investors looking for capital appreciation over a longer time period of 5 years or more.

 

Warm Regards,
Divya Grover
Research Analyst

 

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Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.

 

DISCLOSURE AS PER SECURITIES AND EXCHANGE BOARD OF INDIA (RESEARCH ANALYSTS) REGULATIONS, 2014

About the Company including business activity

Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989.

QIS was promoted by Mr Ajit Dayal with an objective of providing value-based information/views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.

'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name www.personalfn.com for providing information on mutual funds and personal financial planning, financial markets in general, etc. and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services.

Quantum Information Services Private Limited (QIS) is registered as Investment Adviser under SEBI (Investment Adviser) Regulations, 2013 and having Registration No.: INA000000680. In terms of the second proviso to Regulation 3 (1) of SEBI (Research Analysts) Regulations, 2014 the Company is not required to obtain Certificate of registration from SEBI.

Disciplinary history

There are no outstanding litigations against the Company, its subsidiaries and its Directors.

Terms and condition on which its offer research report

For the terms and condition for research report click here.

Details of associates

  1. Money Simplified Services Private Limited;

  2. PersonalFN Insurance Services India Private Limited;

  3. Equitymaster Agora Research Private Limited;

  4. Common Sense Living Private Limited;

  5. Quantum Advisors Private Limited;

  6. Quantum Asset Management Company Private Limited;

  7. HelpYourNGO.com India Private Limited;

  8. HelpYourNGO Foundation;

  9. Natural Streets for Performing Arts Foundation;

  10. Primary Real Estate Advisors Private Limited;

  11. HYNGO India Private Limited;

  12. Suresh Lulla;

  13. I V Subramaniam;

  14. Murali Ananthan Krishnan.

Disclosure with regard to ownership and material conflicts of interest
  1. ‘subject company’ is a scheme on which a buy/sell/hold view or target price is given/changed in this Research Report;

  2. Neither QIS, it's Associates, Research Analyst or his/her relative have any financial interest in the subject Company;

  3. Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report;

  4. Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However, any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront / annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices.

Disclosure with regard to receipt of Compensation
 
  1. Neither QIS nor it's Associates have received any compensation from the subject Company in the past twelve months;

  2. Neither QIS nor it's Associates have managed or co-managed public offering of securities for the subject Company;

  3. Neither QIS nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject Company;

  4. Neither QIS nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.

  5. Neither QIS nor it's Associates have received any compensation or other benefits from the subject Company or third party in connection with the research report

General disclosure
  1. The Research Analyst has not served as an officer, director or employee of the subject Company.

  2. QIS or the Research Analyst has not been engaged in market making activity for the subject Company.

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Subject Company means Mutual Fund Schemes

Quantum Information Services Private Limited CIN: U65990MH1989PTC054667 Regd. & Corp. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021

Email:info@personalfn.com Website: www.personalfn.com Tel.: 022 61361200 Fax.: 022 61361222 SEBI-registered Investment Adviser. Registration No. INA000000680, SEBI (Investment Advisers) Regulation, 2013

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