My situation is described in the attached video. I have read that the issue is with the axe actor losing its parents when I set “simulate physics” to “true” so I need to reparent it and I looked at several other similar queries, but I haven’t managed to do that with multiple blueprints. Can anyone please show me how to do it?
Link to the video explaining everything:
This is expected behaviour. You can’t attach a Physics simulated component to something.
You can take a look at Physics Handles, as they are the closest thing to what you are searching for.
Thanks, but I think physics handles would not allow me to do the throwing and rotating part of the gameplay 
What do you want to do?
In the video that is linked in the post, the first part shows how I throw my axe and it sticks into a wall, which would not be possible to do if I use Physics Handles for my axe. Any other ideas?
What you can do is after you deactivate the physics, attach the axe mesh to the “DefaultSceneRoot” again. That would be a quick fix.
Or in your pickup event: Instead of attaching the axe actor to your character mesh, attach the axe mesh to your character. You can try out both ways 
Let me know if you need help
Thanks, using just the mesh instead of the actor worked!