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Two 5-star rated bluechip funds haven’t been able to beat benchmark returns for 5 years

Blue chip funds invest in equity securities of large-cap companies. According to SEBI, the top 100 companies by market capitalization are where large-cap corporations are defined. These are companies to which large-cap funds must allocate at least 80% of their companies, according to SEBI regulations. As they invest in reputable companies with a track record of success, blue chip funds are renowned for their stability in the face of unpredictable stock markets. To invest in a mutual fund, you should consider its performance over the long term. Additionally, you should choose Blue Chip funds that have outperformed their competitors and benchmarked performance over time, if you’re willing to accept the risks involved. However, the following list of two 5-star rated Blue Chip mutual funds has not been able to beat its benchmark performance over the previous 5 years.

Axis Bluechip Foundation

The fund was introduced on January 5, 2010 and Value Research gave it a 5 star rating. Assets Under Management (AUM) for the Axis Bluechip Fund Regular Plan-Valued Growth 36,980 Crores as of June 30, 2022, while the fund’s net asset value (NAV) as of September 22, 2022, is 44.40. The fund’s expense ratio is 1.62%, and the S&P BSE 100 TRI is the fund’s benchmark. The top five holdings of the fund are ICICI Bank Ltd., Bajaj Finance Ltd., Avenue Supermarts Ltd., HDFC Bank Ltd. and Infosys Ltd.

The fund is distributed by sector to finance, technology, services, automotive and materials industries. The Fund has an ownership ratio in domestic companies with a total of 88.04%, of which 87.61% are large-cap stocks and 0.43% are mid-cap stocks. 11.85% of the fund’s investments are in debt securities. Axis Bluechip Fund Direct Plan’s profit growth last year was -6.05%. It has generated an average return of 12.43% per year since its inception. However, over the past five to seven years, the fund has not been able to beat its benchmark performance, according to Value Research data outlined below.

Tracking returns over time in (%) one year 3 years 5 years 7 years
Axis Bluechip Reg -6.05 13.79 13.07 13.32
S&P BSE 100 MILLION 3.20 18.13 13.33 14.02
Average 1.86 16.67 12.03 12.52

ICICI Prudential Bluechip Fund

Value Research awarded ICICI Prudential Bluechip Fund – Direct Plan a 5-star rating and the fund launched on January 1, 2013. Assets Under Management (AUM) to ICICI Prudential Bluechip Fund Direct-Growth as of May 30. 6 year 2022 already valued 33,739 crores, while the fund’s net asset value (NAV) as of September 22, 2022 is 72.37. The fund’s expense ratio is 1.05% and it uses the S&P BSE 100 TRI as the benchmark. The fund has a strategic allocation to the financial, energy, technology, automotive and construction sectors. ICICI Bank Ltd., Reliance Industries Ltd., HDFC Bank Ltd., Infosys Ltd., and Larsen & Toubro Ltd. are the top 5 holdings of the fund.

The Fund invests 91.7% of its capital in domestic stocks, of which 81.41% is allocated to large-cap companies, 9.28% in mid-cap stocks and 0.61% in equities. small cap stocks. Government securities accounted for 0.42% of the fund’s total 0.41% investment in debt. The 1-year return for ICICI Prudential Bluechip Fund Direct-Growth is 4.64%. It has generated an average return of 14.95% per year since its inception. The fund’s tracked returns over the past five years suggest that it hasn’t outperformed its benchmark during that time.

Tracking returns over time in (%) one year 3 years 5 years 7 years
ICICI Pru Bluechip Dir 4.64 17.86 12.96 14.22
S&P BSE 100 MILLION 3.20 18.13 13.33 14.02
Average 2.27 17.12 12.30 13.05

(Data like of the September 23, 2022. Source Value Research)

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