Bluechip Funds

Very often, investors assigning goals to their Mutual Fund investments come across the term Bluechip Fund. The emergent impression is that the treasured entity is meant only for the privileged and not for the commoners. But digging into its origin will undoubtedly dispel the misconception and lead the investors to fulfil their financial objectives ably. Bluechip was first coined by Dow Jones’ employee Oliver Gingold in 1923 to refer to highly-priced stocks.

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The term’s origin is also attributed to Poker’s most expensive chip, which is blue. Over time, the term bluechip has become synonymous with well-established financially sound companies with a credible track-record of earning profits and consistent dividend payment. Broadly, these funds invest in quality stocks of such companies to book healthy returns.

What is a Bluechip Fund?

The primary objective is to seek a guarantee for invested funds to redeem into cash in financial emergency times. While goal-specific investment is the norm, sound investment prevents losses in times of uncertainty. A Bluechip Fund scheme is tailored to nurse your economic development with wealth creation, securing children’s future, and retirement planning, to name a few of the critical goals. An AMC managing the best Bluechip Fund essentially invests in renowned brand blue-chip company-stocks being safe and reliable. As these stocks are immune to volatility, such funds are often referred to as Growth Funds.

Key Features of Bluechip Funds

Interestingly, SEBI norms do not officially recognize any Bluechip Fund category. However, AMCs denote large-cap funds as Bluechip Funds for conservative risk profile investors to achieve their long-term goals of at least five to seven years, yet shielded from market volatility exposure. Typically, some of the best Bluechip Funds incorporate it in their terminology.  Examples are Axis Bluechip Fund, ICICI Prudential Bluechip Fund, and SBI Bluechip. Some mutual fund schemes insert “emerging” in the name for mid-cap or intermediate categories. Choose wisely before investing, look for the following features, and not rely on the name alone to choose a large-cap fund.

  • The investment portfolio’s steady growth is the usual outcome.
  • This fund has the inherent ability to tide over market volatility as compared to other funds.
  • Their credible track-record epitomizes superior and sustained cash flows over a considerable period.
  • Best Bluechip Fund boasts experienced management to ensure efficient corporate governance.
  • Investors for these funds have a steady dividend earning record.

Benefits of Bluechip Fund

It is understood how Bluechip Fund stock investments meet your financial goals in the long term by a steady stream of returns. The gains are very much in harmony with the parent company’s overall financial performance. Let us now study why we should repose faith in investment into these funds:

Capital Growth

Your primary aim as an investor is to create wealth for an accumulated corpus to raise your economic status ultimately. Since it is an equity scheme, these funds actively help you build wealth through handsome investment returns.

Investment Goals

These funds are active instruments that allow you to set multiple financial goals like planning for retirement or your child’s future. You can achieve your investment objectives by building a significant corpus accumulating yields delivered over some time.

Fund Security

Adherence and mandatory compliance with SEBI and AMFI standards ensure your fund security. Your investment in these funds is not only secure but efficiently managed by professionals.

Financial Stability

Consistent recurrent revenue is the key to your peace of mind helping you to a comfortable lifestyle. Investment in money-market tools ensures that your fund investment continues to deliver stable yields to finance your economic needs.

Ease of Withdrawal

Of what value is your investment if you cannot encash it in times of financial crisis? A Bluechip Fund is an open-ended scheme that allows you to withdraw or redemption facility to tide over the emergent distress without borrowing. Its steady consistent returns on your investment cover unplanned withdrawals without suffering any loss.

How does a Bluechip Fund Work?

The Bluechip Fund essentially invests in Bluechip stocks to ensure your financial growth. However, your risk profile is accounted for by diversifying the investment portfolio proportionately in mid-cap stocks, bonds, and cash instruments.  The adventurous young invest significantly in stocks and equities, while the older adopt a conservative approach and prefer capital preservation to invest in bonds and cash instruments. The idea is to balance the investment portfolio based on individual risk perceptions.

Examples of Bluechip Fund

The Indian market regulator SEBI stipulates investment for large-cap Mutual Funds up to 80% of their corpus in the top 100 company stocks based on market capitalization. These companies largely comply with the definition of bluechip, supported by excellent financial credentials. Some of the notable Bluechip Fund large-cap schemes in the Indian horizon are:

  • Canara - Robeco Bluechip Equity Fund
  • ICICI - Prudential Bluechip Fund
  • HDFC Top - 100 Fund
  • Nippon - India Large Cap Fund
  • Mirae - Asset Large Cap Fund
  • Axis - Bluechip Fund

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

Is Bluechip Fund Vulnerable to Safety Concerns?

Usually, bluechip companies are known to survive market turbulence, but it may not be universally true. There are instances when solid bluechip companies have succumbed to market volatility and perished. One can readily recall the failure of bluechip giants like General Motors and Lehman Brothers during the 2008 Great Recession mayhem. Prudence and your risk profile is the key to your successful Bluechip Fund investment. The redeeming feature in these funds’ vulnerability is its rarity. It is more an aberration than a norm and should not be a deterrent to exploring exciting investment opportunities.

Bottom Line!

For all the attributes of Bluechip Fund as a robust investment option, it is expensive. It is sensible for you to comprehend the value of the targeted fund before investing. The rational approach is an ideal blend of instruments in a diversified portfolio and not putting all the eggs in a single basket. Your risk profile should be the critical determinant in your portfolio. If your risk perception is high or moderate, you may explore investment across sectors or, for that matter, capitalization to counterbalance your fund. A diversified portfolio ensures a steady, albeit a leaner return compared to an exclusive Bluechip Fund. You can generate wealth by investing in small-cap and mid-cap funds and still survive the ups and downs when your fund stabilizes your earnings by rebalancing your portfolio.

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