BOI Axa Launches Bluechip Fund NFO – Should you invest?

BOI Axa Bluechip Fund NFO Review - With product labelBOI Axa Bluechip Fund (New Fund Offer) – NFO Review

BOI Axa Mutual funds is coming up with blue chip fund that would open for subscription on June 8, 2021. BOI Axa Bluechip Fund NFO would invest in large cap stocks in India. Such funds provide stable returns in the medium to long term. There are already bunch of blue-chip mutual funds existing and performing well. Should you invest in BOI Axa Bluechip Fund NFO? What are the risk factors one need to consider before investing in investing in such funds?

What are Large Cap / Blue Chip Mutual Funds?

As the name indicates, the blue-chip funds invest in large cap stocks.

A large cap company is generally defined as trustworthy, reputable and strong. These are generally well-established and has a strong track record. There are several consistent performing large cap stocks that are rewarding investors.

The blue-chip fund is another fancy name being used, though it invests large cap stocks.

BOI Axa Blue Chip Fund NFO Issue Details

BOI Axa Bluechip Fund NFO opens for subscription on Tuesday June 8, 2021 and closes on Tuesday June 22, 2021. It again opens for further subscription from July 1, 2021 after NFO period is over. Here are the NFO issue details.

Scheme Opens 08-Jun-21
Scheme Closes 22-Jun-21
Scheme reopens for continuous purchase/sale 01-Jul-21
Minimum Lumpsum Rs 5,000
Minimum SIP Rs 1,000 for 6 months
NAV of the fund Rs 10 during NFO period
Entry Load Nil
Exit Load Redemption upto 10% – < 1 year – 1%
Risk Very High Risk
Max expense Ratio (TER) 2.25%
Benchmark Nifty 50 Index TRI

BOI Axa Bluechip Fund NFO SID

What is the investment objective of BOI Axa Bluechip Fund?

The investment objective of the scheme is to provide investors with the opportunities long term capital appreciation by investing predominantly in equity and equity-related instruments of large cap companies.

However, there can be no assurance that the investment objective of the Scheme will be achieved.

Who is the Fund Manager of BOI Axa Bluechip Fund NFO?

Mr. Dhruv Bhatia is the fund manager for this mutual fund scheme.

Mr. Dhruv Bhatia joined BOI AXA in November 2018 and has more than 9 years of experience in the Asset Management Industry. Prior to BOI AXA, he was associated with organizations such as AUM Fund Advisors LLP and Sahara Mutual Fund as an Equity Investment Analyst.

His qualifications include Bachelor of Management Studies from University of Mumbai and PGDM (Finance) from SIES College of Management Studies.

Name of other schemes under his management:

1) BOI AXA Midcap Tax Fund – Series 1 – A 10 year closed ended equity linked savings scheme and

2) BOI AXA Midcap Tax Fund – Series 2 – A 10 year closed ended equity linked savings scheme.

The above are ELSS Tax Saving Funds, but with 10 years close ended.

What is the allocation pattern in this mutual fund?

This fund investment pattern is as follows:

Type of instruments Min % Max % Risk Profile
Equity and Equity related companies of largecap companies 80% 100% High
Equity and Equity related companies of midcap and smallcap companies 0% 20% High
Debt and Money Market instruments 0% 20% Low to Medium
Units issued by REITs and InvITs 0% 10% Medium to High

Why should you invest in such bluechip funds?

Here are a few reasons to invest in such funds.

1) Blue chip funds invest in large cap stocks which are considered as stable companies for investment.

2) These blue chip funds are considered relatively safer as they invest in large cap stocks that are believed to be fundamentally strong. If there is a huge stock market crash, such large cap stocks would tend to recover faster during the recovery phase.

3) These funds invest in large cap stocks which are considered relatively safer compared to midcap or small cap funds. Midcap and small cap funds are high risk. If you are moderate to high-risk investor, investing in blue chip funds could be a good idea instead of going for midcap or small cap funds.

4) Bluechip stocks might pay dividend too. This could provide dividend yield to your portfolio (though not guaranteed).

Some risk factors you should consider before investing in such funds

One should consider some of these risk factors / negative factors before investing.

1) Blue chip funds invest majorly in large cap stocks that may provide stable returns. You cannot expect to be extremely high returns which we could see in multi-baggers stocks.

2) This fund invests up to 20% of its portfolio in midcap/small cap segment which is high risk.

3) It would invest up to 20% in debt related instruments. Debt instruments have become high risk these days as they might invest in corporate debt instruments where we could see default risk.

4) This fund invests in REITs and InvITs which are high risk.

5) Read all risks indicated in scheme related documents carefully before investing in such schemes.

How is the Performance of existing blue chip Funds?

Some of the funds have added fancy name “blue chip” to their fund name though they invest in large cap funds. Let us use the same methodology and filter top performing blue chip mutual funds. These are annualised returns.

Fund Name 3 Years 5 Years 10 Years
SBI Blue Chip Fund 12.7% 12.9% 14.5%
Axis Bluechip Fund 15.7% 16.3% 14.5%
Canara Robeco Bluechip Equity Fund 17.4% 16.7% 13.8%
ICICI Prudential Bluechip Fund 12.6% 14.3% 13.5%
Kotak Bluechip Fund 14.7% 13.8% 12.8%
Franklin India Bluechip Fund 13.2% 12.4% 11.9%

Should you invest in the BOI Axa Bluechip Fund NFO?

This blue-chip mutual fund invests in large cap stocks. Blue chip / Large cap stocks provides stable returns to investors. As indicated earlier, do not expect such funds to be like multi baggers. Large cap funds can provide 10% to 15% annualized returns in the medium to long term though not guaranteed. Moderate to high-risk investor can invest in such blue-chip funds. If you do not want to test with such new funds, you can invest in some of the best blue chip mutual fund schemes recommended earlier.

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Suresh KP

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