What are the differences between stocks and bonds? What is the reason behind the great performance of Axis Bluechip fund?
Stocks are equity or ownership of a company, while bonds are what a company issues when it borrows money. Any bond is like a deposit that you see in a bank and carries a deposit. Also, it has a term and an interest rate. Depending on how risky or how safe your investment in that company is or how financially stable and strong that the company is, the interest rate can vary. Assuming a 10-year bond of two different companies, one which is financially very strong will have a lower return because your returns are safe as compared to a shaky company which will give you a higher return simply because investors are expecting a higher return.
Now comes why Axis Bluechip is considered to be a very good fund. Firstly, all bluechip funds invest in large companies with strong track records and Axis Bluechip has delivered a strong performance. If you look at its performance in the last five years, its return has been about 8 per cent today, which is better than that of very weak performers. The fund has been able to withstand the decline in the past six months. Over the past one year, the fund has fallen about 4 per cent, while the S&P BSE 100, a benchmark that is made up of top 100 companies, has fallen by 11 per cent. The fund follows the principle of investing in high-quality companies with strong growth. This has made it fall less and hence makes it a good fund.