The bellwether indices, Sensex and Nifty, have been scaling new highs, propelled by a handful of stocks. But many large-cap funds, held back by their portfolio mix, are struggling with single-digit returns over the past year. Only a few have bucked the trend and raced ahead. Axis Bluechip is among the funds in the large-cap category that have delivered returns in high teens, close to the market benchmarks’ returns.
This superior show has also aided the fund’s long-term performance, and it figures in the top quartile among large-cap peers over three- and five-year periods. Even otherwise, the fund has been delivering well. Except for under-performance in calendar 2016, the fund has been a consistent outperformer, doing better than its benchmark (Nifty Total Return Index) and category averages both during market upsides and downsides. Its annualised return over five years is 18 per cent plus. Investors can consider buying the fund through the SIP route as part of their core portfolio.
Axis Bluechip invests predominantly in large-cap stocks (at least 80 per cent as per mandate) and has the leeway to invest the balance in mid- and small-caps. The fund follows a bottom-up, fundamentals-based stock-picking approach with focus on quality businesses.
Besides its core portfolio, the fund takes tactical positions in quality cyclical stocks, too. It had 29 stocks in its portfolio as of July 2018, down from 35 a year back, and five stocks account for about 35 per cent of the corpus. While a compact portfolio increases the fund’s concentration risk, this is mitigated by the focus on blue-chip stocks.
Asset allocation
Shift in asset allocation and market-cap weightages has been deft. Over the past year, the fund has reduced its exposure to equities from 93 per cent of the corpus to 85 per cent as of July; exposure to cash has been correspondingly increased from 7 per cent to about 15 per cent.
Among stocks, mid-cap exposure has been pared steadily from 8 per cent to 2 per cent of the corpus over the past year. This conservative approach has helped the fund with many relatively overvalued mid-cap stocks and some large-caps, too, slipping quite a bit this calendar.
Over the past year, winning stocks such as Bajaj Finance, HUL and TCS in which the fund upped or purchased stake aided its returns. Most stocks in the portfolio have gained the past year. Over the past five years, stocks such as Maruti Suzuki and Kotak Mahindra Bank have been multi-baggers.
Compared with its benchmark, the fund is overweight on the consumer, and auto and logistics sector, while being underweight on oil and gas, and software companies. At more than a third of the corpus, banks and finance is the fund’s largest sector allocation.