Introduction to Blue Chip Mutual funds
Large cap collective finances generally invest in companies having a large request capitalization. Large cap finances are known to offer harmonious returns. The companies in which large-cap finances invest are generally leaders in their field of business and hence, tend to remain more stable when compared to small or mid-cap companies at times when the requests go unpredictable. The large cap companies generally have a good track record in the request backed by healthy commercial governance practices.
What is Blue Chip Mutual Fund?
Blue Chip Mutual Funds are a class of equity finances that invest substantially in the equity and equity- linked instruments of companies ranked under 100 in request capitalization. Large cap companies are known for their stability and have a track record of furnishing harmonious returns. Still, these companies may be outperformed by small and mid-cap companies during the bullish request trends.
Conservative equity investors may consider investing in these finances as the underpinning companies aren’t affected important by the request movements. Thus, these funds are less unpredictable than small and mid cap funds. The asset allocation of large companies is substantially made towards the securities issued by blue- chip companies.
Top 5 Blue Chip Mutual Funds to consider Investing
- UTI Mastershare Unit Scheme – Direct Plan – Growth
- Axis Bluechip Fund – Direct Plan – Growth
- ICICI Prudential Bluechip Fund – Direct Plan – Growth
- SBI Blue Chip Fund – Direct Plan – Growth
- Canara Robeco Blue Chip Equity Fund – Direct Plan – Growth
Who Should Invest in Blue Chip Funds?
As mentioned over, the large cap finances are suitable for conservative equity investors. Since the asset allocation of these finances is generally made towards the securities issued by fairly stable companies, the performance of these finances is stable. This makes large cap finances less vulnerable to the volatility seen in the equity requests.
Investing in blue chip funds is suitable for those looking to diversify their portfolio with the stocks of leading companies across request sectors. However, the other sectors may help in reducing the adverse goods, If one sector fails to meet the prospects. On the wise side, the returns offered by these companies can be elided as the underpinning companies are stable and generally give lower returns than small and medial cap companies.
You may consider investing in these funds if you aren’t willing to take a high threat and are happy with average returns. First- time equity investors may get started with their request- linked investments by investing in these finances. This will give them a regard of what collective finances are able of.
Effects an Investor Should Consider While Investing in Large Cap Finances
Blue Chip Funds are also subject to request threat. Investors must consider factors that may impact the performance of their investment and eventually, the returns. Investors should keep in mind their age, threat profile, pretensions, and investment horizon while making any investment opinions.
Following are some of the factors that investors must assay while investing in blue chip mutual funds.
- Know your investment ideal
- Check if the objects of the fund are in line with your pretensions. Understand the style of fund operation to know about the performance of the finances.
- Past performance of the large cap fund
- Analyzing the once performance is pivotal while deciding to invest in large cap finances. Pick those finances that have been harmonious in their figures in all request conditions and cycles.
- Experience of the fund director: Fund directors, particularly in the case of large cap collective finances, play a definitive part in the generation of returns. Fund directors with experience and moxie will be suitable to move the capital in the right direction when the request looks promising.
- Expenditure rate: Expenditure rate impacts investors directly and includes costs similar as the brokerage figure, the figure charged by the collective fund house, and so on. Some fund houses may charge a high figure but also offer advanced returns. Keep in mind the figure, other charges, NAV, and returns before shortlisting finances.
- Know about the exit load: This is a cost that investors directly dodge. Despite exit load coming into the picture only at the time of redemption, you should still consider it. Exit load takes down a bit of the NAV. Hence, the lower exit load translates into advanced returns.
Advantages and Disadvantages of Blue chip Mutual Fund
Advantage of Blue Chip Mutual Fund
One of the most significant advantages of investing in blue chip funds is the stability they offer. These companies have a solid track record, furnishing regular payment of tips as well. This compensates for the fact that large-cap finances don’t have the eventuality to offer veritably high returns.
Because of their presence in the request for numerous times, investors can pierce their profitability and fiscal details for a course of time to assess their performance before making any opinions. This fiscal exploration data, when viewed alongside the history of the company and its present business conditioning, can help in the accurate determination of the valuation.
Investing in mutual funds can be parlous if you don’t understand request movements, and it’s recommended to consult an expert.
Disadvantages of Blue Chip Mutual Funds
These funds have been characterized as an ideal investment option for new investors or those that don’t wish to take pitfalls. One disadvantage of this fund is that the growth eventuality of underpinning stocks might be limited.
The returns generated also be to be lower than those that returns gets from the small and mid-cap finances. In addition to this, it’s the fund director who takes the opinions pertaining to the stocks in your portfolio, which leaves you with little or no control on the portfolio.
Disclaimer: Stock Market Investments are subject to market risks and volatile asset class. Do Your own research before investing on your own. This article is not an investment advice.