What went wrong with Axis Bluechip Fund


Axis Bluechip Fund was once the go to large cap fund for most investors in the large cap space.

This was not confined to only those wanting to invest in a large cap fund but also those who did not, they were motivated by returns.

2018 to mid 2020 was the same case for most axis mutual fund schemes & not just Axis Bluechip Fund.

So what exactly has gone wrong & what is ailing Axis Bluechip Fund.

axis mutual fund


What is Axis Bluechip Fund?

Axis Bluechip Fund is a large cap fund & thereby invests majorly in large cap stocks.

A large cap fund by regulation needs to invest a minimum of 80% in the top 100 listed companies i.e. large cap stocks.

The fund manager has complete freedom to invest as per her wish with regards to the remaining 20%.

The new regulations were set in place in 2018 by SEBI’s re-organization of schemes.


Additional reading: Click Here to read about how Inflation is destroying your hard earned money.

What went wrong with Axis Bluechip Fund?

Axis bluechip fund has been on a downward spiral for quite some time now.

What is interesting to note here is, this is case with most other equity schemes from the axis mutual fund house.

So what is ailing it?

Returns & Performances are subjective & relative, often when the markets are looking up, investors rarely take the initiative to study the reasons for the rise.

When the markets are on a downfall, all of a sudden there are various studies and often also theories to unravel the mystery of this downfall.

Understanding why a fund is doing well is as important as understanding why it is not, often the ladder that helps us scale new heights is also the same reason for our downfall.



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Cash Holdings

During 2018 & 2019, Axis Bluechip fund along with most equity schemes of axis mutual fund had high cash holdings.

Even the number of holdings were limited.

One possible explanation for this is because the market provided fewer attractive opportunities for growth.

Therefore the fund preferred to hold on to a limited number of growth companies with the rest held in cash.

The fund could afford to sit on the same set of companies across various quarters with the rest of the aum held in cash since the market at the time had limited number of companies that were in reality driving the market.

This is not the case with the market scenario anymore and therefore the approach of setting aside a certain portion of aum in cash will less likely yield any significant result. 


Cash Holdings in Axis Bluechip Fund

December 2018


December 2021


January 2019


January 2022


February 2019


February 2022


March 2019


March 2022



The difference between the two corresponding years for the same month shows a reduction of more than 10% in cash holdings as opposed to what was the case earlier.


Additional reading: Click Here to read about how Compounding works in mutual funds. 


Axis Bluechip fund has traditionally applied a focused approach to its portfolio even though it is not a focused fund.

Earlier the fund had limited its holdings to 20-25 stocks with the rest held in cash.

These 20-25 stocks during the fund’s high phase were growth companies with healthy earnings.

Now the market has moved on and there are more than these 20-25 stocks dispersed across various sectors that have been posting healthy results.

This has meant the focused approach does not have an environment anymore conducive for its functioning.

This does not imply that the focused approach despite the category is irrelevant now but rather a focused approach using the same set of holdings is no longer working.

The market has changed drastically in various ways since the crash of 2020 and therefore an active approach is the need of the hour.

It was not about the ever increasing aum that has also affected the strategy but also about the increase of aum in such a short time.





December 2018



January 2019



February 2019



March 2019



April 2019





Growth versus Value

Axis mutual fund as a whole has mostly been driven by the growth strategy.

Axis bluechip has been no exception.

As previously mentioned, the fund was usually made up of a limited number of growth stocks that yielded healthy results.

The fund would play it safe by betting on the traditional powerhouses in their respective fields, as mentioned previously the markets were being driven by a limited number of stocks.

The fund was overweight on traditional sectors like Banking with what can be termed as defensive stocks.

After the crash of 2020 though, the market has seen a rally that has resulted in previously unmoved sectors & companies also participating and taking an upward turn.

Sectors like IT & Pharmaceuticals which were previously in a limbo got a breath of fresh air, in a market rally all sorts of sectors and companies make fresh gains.

This meant the markets were no more driven by a few sectors and companies and there were a lot more opportunities available now.

Value funds & funds with a value approach that were dormant for some years now all of a sudden found a spring in their step.

Other large cap schemes were now therefore benefitting from this rally and expanded further their investment horizons whereas Axis Bluechip fund failed to accommodate the changes.


Are you investing in the right mutual funds?


Every mutual fund scheme and mutual fund house as a whole will go through various phases, ups and downs.

It is not possible for one to be at the top constantly.

One of the many reasons for this is because India’s a developing economy and thereby volatile.

As an economy it undergoes various economic policy changes, its stock market is more volatile than those of developed economies.

This volatility though is what also provides its investors with opportunities to make money, precisely why FII’s chose India along with other developing economies to hold their money.

Due to all the reasons mentioned, one needs to adopt an active approach while investing & not fall into the trap of sitting on proven winner so to speak.

Where axis bluechip fund went wrong was in sticking to its investing style even when the market movements were not conducive to it.

This by no means should be inferred as an encouragement to momentum investing or trading but rather is a reminder that adaptability still remains the first step towards surviving, thriving remains the next.


With a rising AUM and a category where options are limited, its ability to beat the benchmark gets even more restricted. It no more serves the need of a long term investor with long term goals. 

This is not to say the fund will continue to lag but one does wonder its viability & long term sustainability to find its place in a mutual fund portfolio for the long term. 

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Disclaimer : While due precaution has been undertaken in the preparation of this article, The Mutual Fund Guide or any of its authors will not be held liable for any investments based on the above article. The above article should not be considered financial advice and has been published only for your perusal. Due credit has been given in case wherever required, in case you feel any part violates any rights then do get in touch with us and we shall get it duly removed.  
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