Fund of Fortnight

This is our mutual fund recommendation. Every fortnight , we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same

Axis Bluechip Fund

Reason for recommendation
In the last 12 months, mid-cap indices have seen a jump of nearly 80 per cent in their value, compared to a 42 per cent rise in the Nifty. This is also reflected in the performance of funds dedicated to such categories. Such a huge outperformance of mid-cap stocks has made them a little expensive while the large-cap has become fairly valued if not attractive. In terms of forward PE, Nifty is trading at 20.5 times compared to its last five-year average of 21.2 times. Therefore, large-cap funds are now better placed in terms of risk-return reward.

Axis Bluechip Fund is one of the best funds from the large-cap category when it comes to its ability to provide downward protection. It has the lowest weekly return drawdown in its category. When on an average large-cap funds have a maximum drawdown of 33 per cent, this fund has a maximum drawdown of 27 per cent. What also favours the fund is its capture ratio. It has the maximum capture ratio in its category of 90 per cent which means that when its benchmark goes up by 10 per cent, the NAV of the fund moves up by 9 per cent.

It has downside capture ratio of 82 per cent which means that if the benchmark goes down by 10 per cent, the fund’s NAV drop by 8.2 per cent. The fund is a pure-play on large-cap stocks as currently 99 per cent of its portfolio consists of large-cap stocks. At the end of the June 2021, the fund had 36 stocks with high-quality names such as Infosys, TCS, ICICI Bank and HDFC Bank, among others. The fund is overweight on the financials and technology sector, which are expected to continue with their better performance. The fund is suitable for moderate risk-taking investors with an investment horizon of at least three years.