Ask Morningstar: Why has Axis Bluechip disappointed?

Himanshu Srivastava, associate director of manager research, answers a reader's query.
By Himanshu Srivastava |  03-11-22 | 
 

Should I switch from Axis Bluechip to an index fund? I am disappointed with the performance of Axis Bluechip.

The performance of Axis Bluechip Fund has been found wanting in recent times. But that does not make it a bad fund. Every fund goes through a cycle of outperformance and underperformance. But the performance should be looked from the perspective of the fund’s strategy.

This fund is managed with a growth-oriented approach, and post Covid, growth style of investing has been out of favour. This resulted in the fund delivering a rather underwhelming performance in 2021 and this year so far. However, from 2017 till 2020, when growth was in vogue, the fund consistently delivered top quartile performance within its category. Hence, this aspect should not be ignored.

The fund’s long term track record (over 5 years) is still intact as it features in the top performance quartile within the category.

This is why diversification helps. Along with another fund run with a value driven approach, a diversified portfolio can be created. Hence, my advice is to consider staying put in this fund for now. But that should also not stop you from investing some portion of your investments in an index fund from the perspective of diversification.

At this juncture, I would like to highlight a study that we recently did to give you better perspective on investing. This study is called Mind the Gap. It talks about the difference between the fund return and the return investors would have made by investing in it. Most often than not, investor returns tend to be lower than the fund returns because most investors invest in a fund when it has done well and redeem their investments when the fund struggles as they lose patience. However, investors who stay invested in a fund through a market cycle are positioned to earn better returns. You can read it here: Why you don't like the return of a well performing fund.

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Underperformance forces you to look at strategy

Articles authored by Himanshu Srivastava

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