The objective of the scheme is to achieve long-term capital gains by investing in a diversified portfolio consisting mainly of large-cap business equity & equity related instruments.
It invests 80–100 percent in large-cap firms and 0–20 percent in others. With a 3-year annualized return of 11.99 percent and a 5-year return of 17.00 percent, it is 2 percent higher than the returns from the benchmark and 2-3 percent higher than category returns.
The fund is one of the top-performing funds in the large-cap group. Axis Bluechip fund has surpassed its peers and has consistently produced strong returns over time. It has been ranked number one in the large-cap category by experts.
People usually invest in some funds that have given the highest returns in the past. It can also mean that the stocks they have invested in have already run, and hence there is less space in the short term. Historical returns over a more extended time however often reflect a fund manager’s ability to produce alpha (outperformance) under different market conditions.
Therefore, their investment decision should not be based only on past returns. Apart from the previous results, the various factors listed below should also be considered while selecting the fund:
Long-term returns (1 year, three years, and five years) – Axis Bluechip fund should have stable output at different times, and should get higher returns than its benchmark.
SIP Returns – Compared to lump-sum funds, these returns are quite different. SIP balances investment expenditure and risk, and this helps to produce higher long-term returns. You will also benefit from SIP investment in a bear market.
Standard deviation — unlike its average, it calculates the volatility of returns from investment.
Sharp Ratio – Is the average return earned more than the risk-free rate for the total risk made by the fund. Shows that the fund’s returns are relative to its risk. The higher the ratio, the better the fund.
Sortino Ratio – This increases the Sharpe Ratio taking into account the downside rather than the overall risk. It ensures a higher return per unit of bad risk invested. The higher the ratio, the stronger the fund.
Alpha-investment has an additional return compared to its benchmark return. Alpha more, the stronger the fund.
Beta – measures the risk or volatility of the fund compared to the market. Conservative investors should go for low beta funds, while high beta funds are for aggressive investors.
Fund Size – The size of the fund should not be either too big or too small. That will put pressure on the fund manager to invest money for a fund with a larger fund size, which will put pressure on him to explore further. And as a result, he can compromise on price and invest in relatively underperforming stocks resulting in lower fund returns.
Note: I would recommend you to go ahead and make a minimum investment period of 5 years in this scheme. Consider investing in a SIP instead of a lump sum.