Axis Bluechip Fund Pyt of Inc Dis cum Cap Wdrl INF846K01172

Axis Bluechip distinguishes itself through its steadfast adherence to its mandate, characterized by stable leadership under manager Shreyas Devalkar and a framework firmly grounded in relative quality and growth. The manager's skill in stock-picking, coupled with his unwavering commitment to the mandate and refusal to stray from the established framework, are notable positive aspects, especially during challenging performance periods for the fund. That said, the equity team at Axis MF is undergoing a transition currently, and until it stabilizes our confidence remains muted. We retain ratings of Average for the team and Above Average for the process.

Lead manager Shreyas Devalkar has been managing this fund since November 2016 and plies a structured and well-thought-out process of investing with a focus on relative quality and growth. This approach leads to a well-defined stock selection process and a portfolio of high-conviction blue-chip stocks. Before joining Axis MF, Devalkar was associated with BNP Paribas MF (now Baroda BNP Paribas MF) as a fund manager for five years, where he managed similar strategies. Overall, Devalkar’s more than a decade-long experience encompasses working as a credit analyst, sell-side broking analyst, and buy-side equity analyst covering multiple sectors.

Devalkar looks for companies with a relatively higher growth trajectory and places a lot of emphasis on finding quality names. The manager is willing to pay a higher price for companies that project a relatively better quality/growth trajectory on a sustainable basis. Devalkar's framework divides the portfolio into two segments. The first, accounting for approximately 60%, consists of leaders: companies operating in a steadily growing sector with dominant market shares, expected to yield consistent returns. The remaining 40% is allocated to challengers: companies gaining market share through unique offerings or cost advantages in large sectors. This portion aims to contribute alpha to the portfolio.

Longtime manager and head of equities Jinesh Gopani departed from the fund house in September 2023, having been associated with it since 2009. Following Gopani's exit, Devalkar was promoted to the position of head of equities. Devalkar has experienced an increase in responsibilities following Gopani's departure. To address this, proactive measures have been taken to reorganize the team and redistribute his workload. In August 2023, Ashish Naik was appointed comanager for the fund.

The recent appointment of Ashish Gupta as the new chief investment officer is a strategic move to enhance oversight and management of the investment function, with both heads of equities and fixed income reporting to him. The team is in a phase of transition, aiming to grow from its current composition of seven managers and six analysts to a larger team of nine managers and nine analysts. The team has recently hired Jayesh Sundar and Sachin Anandrao Relekar to bolster the team.

Devalkar’s style and framework were extremely rewarding during 2017-20; it was among the first quartile over all these years. From mid-2021 onward, the fund’s performance started to show signs of dipping. It has continued to be disappointing in terms of performance so far. This has been attributable to the style headwinds and names that are not a part of the managers' quality and growth filtration process doing well. Pleasingly, the manager has not deviated from his framework.