Axis Bluechip Fund: A good bet in uncertain times

The troubles are piling on for India Inc and the stock market.

Even as concerns about economic growth in India continue, increasing worries about the coronavirus (COVID - 19) becoming a global pandemic have started taking a toll.

Stocks, globally as well as in India, have taken a sharp knock over the past few days.

It is hard to predict how the spread of the virus will eventually play out. But it is fair to assume that if the spread continues, there could be a significant negative impact on economic growth, globally and also in India. This, in turn, will also reflect on the performance of stocks.

Against this backdrop, fundamentally strong large-cap stocks — with their advantages of size, market leadership and financial muscle — could possibly weather the downturn better than mid- and small-cap ones. So, a well-run large-cap fund with a good track record could be a safer bet for investors in these uncertain times. Axis Bluechip is a good choice in the category.

The fund is in the top-quartile in the large-cap category and has comfortably outperformed its benchmark (Nifty 50 TRI) — with returns of about 21 per cent over the past year, 17 per cent annualised over three years, and 11 per cent annualised over five years.

Except for underperformance in CY2016, the fund has been a consistent outperformer, doing better than its benchmark and category averages, both during market upsides and downsides.

Investors can consider buying the fund through the SIP route as part of their core portfolio.

Strategy

In keeping with its large-cap mandate, Axis Bluechip invests predominantly in large-cap stocks (at least 80 per cent of the portfolio) and has the leeway to invest the balance in smaller stocks.

The fund follows a bottom-up, fundamentals-based stock-picking approach with a focus on quality businesses with good growth prospects.

Besides its core portfolio, the scheme takes tactical positions in quality cyclical stocks linked to the views of the fund manager (Shreyash Devalkar) on cyclical factors and market positioning.

It seeks to keep risks low by having the portfolio’s target volatility below that of the benchmark.

The fund is benchmark-agnostic — there is much divergence between the components of the portfolio and the benchmark. It has 24 stocks in its portfolio as of January 2020, and the top five stocks account for almost 40 per cent of the corpus. While a compact portfolio increases the fund’s concentration risk, this is mitigated by the focus on bluechip stocks.

The top holdings are HDFC Bank, Bajaj Finance, Kotak Mahindra Bank, ICICI Bank and Avenue Supermarts. Other bluechips include HDFC, Infosys, Asian Paints, Bajaj Finserv, HUL, Maruti Suzuki India and Reliance Industries.

Many of these stocks have delivered handsomely over the past few years.

Asset allocation shifts

The fund has been nimble with its shifts across asset classes — moving from equities to cash and cash-equivalents, and vice-versa, depending on market conditions.

For instance, its exposure to equities was reduced from about 93 per cent as of September 2019 to 84 per cent as of December 2019, and increased to 90 per cent as of January 2020.

Within equities, too, the scheme has churned allocation across market-caps, based on market conditions. Over the past couple of years, it has cut its exposure to mid- and small-cap stocks; the portfolio is currently (as of January 2020) almost entirely large-cap-oriented.

At nearly 45 per cent of the corpus, banks and finance is the fund’s largest sector allocation.

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