Axis Bluechip Fund: A proven large cap wealth creator

What is a blue chip fund?

Blue chip stocks are very large corporations with strong nationwide or even global reputations. Based on market capitalization, they are the largest of the large cap stocks (100 largest companies by market capitalization). Though there is no regulatory guidance on what constitutes a blue chip stock, many investors consider companies that are part of the Nifty 50 index (50 largest companies by free float market cap), blue chip. From a SEBI mutual fund category standpoint a blue chip fund is essentially a large cap fund.

About Axis Bluechip Fund

Axis Bluechip Fund was launched in 2010 and has around Rs 33,892 crores of assets under management (AUM). It is a very popular large cap fund with retail investors. The scheme has delivered 11.7% CAGR return since inception (as on 18^th August 2023). The total expense ratio (TER) of the scheme is 1.56% only. The scheme benchmark is S&P BSE 100 TRI. Shreyash Devalkar (managing the fund since 2016), Vinayak Jayanath (from January 2023) and Ashish Naik (from August 2023) are the fund managers of this scheme. The fund managers have combined experience of 40 years.

Wealth creation by Axis Bluechip Fund

The chart below shows the growth of Rs 10,000 lump sum investment in Axis Bluechip over the last 10 years (ending 17^th August 2022). Your investment would have multiplied 4 times in the last 10 years at a CAGR of 14.4%.

Source: Advisorkhoj Research

Investment Strategy

Axis Bluechip Fund invests primarily in Nifty 50 stocks. Nifty 50 is the index of the 50 largest stocks based on free floating market capitalization on the National Stock Exchange. These are the largest publicly traded companies in India. The fund manager targets to outperform the benchmark while undertaking risk that is lower than the benchmark. The salient features of the investment strategy are as follows:-

• The scheme invests 80 - 100% of its assets in large cap stocks. As per SEBI’s definition, top 100 stocks by market capitalization are classified as large cap stocks.


• The fund managers aim for a relatively liquid portfolio.


• The fund managers target volatility below the scheme benchmark i.e. Nifty 50 TRI.


• Stock picking by the fund manager is purely bottom up. The fund manager focuses on fundamentals, when selecting stocks for the scheme portfolio.


• Risk management embedded in the investment process.


• The fund selects stocks based on their ability to grow earnings on a sustainable basis from a medium term perspective.


• The portfolio companies can be divided into two segments:-


• 60% leaders: Companies which operate in secular growth segment and has leading market share in their areas of operation. These stocks are expected to provide steady returns.


• 40% challengers: Companies that are gaining markets share due to differentiated offering or cost advantage, in large sectors. These stocks are expected to deliver alpha for investors.

Lower downside risk

The table below lists the 6 biggest market drawdowns in the last 10 years or so. You can see that fund managers were successful in lowering downside relatively to the benchmark index; Axis Bluechip Fund suffered smaller drawdowns compared to BSE 100 TRI.

Source: Advisorkhoj Research

Track record of alpha creation

The chart below shows the 3 year rolling returns of Axis Bluechip Fund versus Nifty 50 TRI since the scheme’s inception. Regular readers know that, we show 3 year rolling returns because equity investors need to have minimum 3 year investment horizon. You can see that Axis Bluechip Fund was able to beat the benchmark most of the times across different market conditions over 3 year investment tenures.

Consistency is one of the most important attributes of a mutual fund scheme’s performance. You can see that average and median rolling returns of Axis Bluechip Fund were higher than the benchmark index.

Axis Bluechip Fund has given 12%+ CAGR returns more consistently compared to the benchmark index. At the same, Axis Bluechip Fund provided better downside risk protection over 3 year investment tenures. Axis Bluechip Fund never gave negative returns over 3 year investment tenures. Axis Bluechip Fund has a consistent long term track record of alpha creation.

Source: Advisorkhoj Research

SIP Returns

The chart below shows the growth of Rs 10,000 monthly SIP investment in Axis Bluechip Fund over the last 10 years (ending 18^th August 2023). With a cumulative investment of Rs 12 lakhs, you could have accumulated a corpus Rs 22.5 lakhs by investing through SIP in this scheme. The SIP performance of the scheme, again demonstrates the wealth creation track record of Axis Bluechip Fund.

Source: Advisorkhoj Research

Why is recent underperformance not a cause for worry?

Axis Bluechip Fund has been underperforming on a relative basis over the last couple of years. Point to point returns does not always give the right picture and we need to look at performance from the right perspective. Axis Bluechip was a top quartile performer for 4 consecutive years from 2017 to 2020 (source: Advisorkhoj Quartile Rankings). The fund has a quality orientation. As a result the fund saw smaller drawdown in the COVID-19 crash. Strong performance in one year can have an impact on next year’s performance, because you will be starting next year off a higher base versus another fund which starts off a lower base. This may have contributed to underperformance in 2021.

Another contributing factor may have been the impact of higher interest rates on the valuations of certain stocks, especially growth stocks. We think both the factors are temporary and may have already been played out. Interest rates have peaked and going forward, returns will be driven by earnings growth forecasts and quality of businesses. Axis Bluechip Fund has a strong conviction in its investment process and focuses on quality stocks. This investment strategy has produced strong performance in the past and gives us the confidence the fund will see a bounce back in performance.

Why invest in Axis Bluechip Fund?

• Blue chip funds invest primarily in large companies.


• Such companies are traded frequently and hence liquidity is very high and also less volatile as these stocks have proven track record, business models and capable enough to deliver long term consistent returns.


• The Axis Bluechip Fund aims to outperform the benchmark with risk lower than the benchmark and has demonstrated performance track record.


• Equity as an asset class holds potential to beat inflation and generate long term wealth.


• Axis Bluechip Fund may be suitable for long-term goals such as children's education & their future, retirement or any other long term growth that needs wealth creation plan.

Who should invest in Axis Bluechip Fund?

• Investors looking for capital appreciation over long investment tenures.


• Investors with minimum 5 years investment tenures.


• Investors with moderately high to high-risk appetites.


• Since the scheme invests in blue chip stocks and aims for lower volatility relative to the market, it may be suitable for first time or new investors.


• Investors should consult with financial advisors if Axis Bluechip Fund is suitable for their investment needs.