The key benchmark indices — the Sensex and the Nifty — have climbed to record highs in recent times, driven by large-cap stocks. Large-cap as a fund category has delivered good returns over the past year. While mid- and small-cap funds have delivered negative returns, large-cap funds have clocked positive returns of over 8 per cent in the past one year.

In volatile markets, investors with a moderate risk appetite can consider resilient large-cap funds. Axis Bluechip, which has over eight years of track-record, has managed to deliver stable returns over the time period. It has given 15.7 per cent and 13.9 per cent annualised returns over seven- and five-year periods, respectively — outperforming benchmark Nifty Total Return Index and also the category average. Though the fund has slightly underperformed the benchmark over a one-year period, it is among the top-quartile funds within the large-cap category over three-, five- and seven-year periods.

The underperformance in the last one year could be due to the rally in the benchmark indices boosted by a few large-cap stocks. The fund has a compact portfolio with just 22 stocks that are predominately large-cap.

 

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Performance and strategy

Apart from the 2016 underperformance, the fund had delivered excellent returns over the long run and across market cycles. Axis Bluechip invests about 80 per cent of its assets in equity and the balance in debt. When the markets turn volatile, the fund increases its exposure to debt while trimming it in equity.

The fund follows a bottom-up approach for stock-picking with a focus on quality businesses. It largely invests in blue-chip stocks that are resilient to market volatility, helping it mitigate the risks that arise from a compact portfolio.

Banking has been the top preferred sector. The fund has exposure to 14 sectors, but banks, software, finance and consumer non-durables form the core of the portfolio with an asset allocation of more than 9 per cent. It exited from the auto ancillary sector over the last year. The fund has upped its allocation in software and retailing, and reduced it in automobiles and petroleum products, over the past year. The scheme exited stocks such as Mahindra & Mahindra, Eicher Motors and Page Industries, and added ICICI Bank, Nestle India and Wipro to its basket over the past six months. Top holding stocks such as HDFC Bank , Bajaj Finance, Kotak Mahindra Bank and TCS have delivered good returns. Other stocks such as Avenue Supermarts and Titan Company have also given stellar returns.

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