Bluechip Fund Meaning, Features & Why to Invest in Blue-Chip Fund digibank by DBS

Its businesses straddle the entire financial services spectrum, renewable energy, data analytics, data management services and many more. If you had invested Rs 1,000 per month for 5 years through SIP, your investment value would have been Rs 60,000 Lakhs and the fund’s value would have grown to Rs 92,964. Companies who issue these shares are well-established and enjoy great market repute; therefore, the shares issued moving annual total by them are highly valued in the market. A blue chip is stock in a stock corporation (contrasted with non-stock one) with a national reputation for quality, reliability, and the ability to operate profitably in good and bad times. Name, PAN, Address, Mobile Number, Email id and Income Range have been made mandatory. Investors availing custodian services will be additionally required to update the custodian details.

bluechip fund meaning

The Nifty 50 was a group of 50 stocks that were most favored by institutional investors in the 1960s and 1970s. A blue-chip company is a multinational firm that has been in operation for a number of years. Think companies like Coca-Cola, Disney, PepsiCo, Walmart, General Electric, IBM, and McDonald’s, which are dominant leaders in their respective industries. Blue-chip companies have built a reputable brand over the years and the fact that they have survived multiple downturns in the economy makes them stable companies to have in a portfolio. A blue chip refers to an established, stable, and well-recognized corporation. You may invest in expert-curated mutual fund plans consisting of top-performing Blue Chip funds by downloading the BLACK by ClearTax app.

Download HDFC Life App

It is considered a viable investment option as it gives people the opportunity to invest in a diversified and professionally managed basket of securities. AMCs offering Blue Chip Funds are generally known brands offering widely acclaimed goods and/or services, and their output reflects their sales, profitability, and dividend outcomes. In a nutshell, the stock of each blue chip company makes the investments safest and most reliable. And that’s why most of these stocks are less volatile compared to the lower market players and investors prefer them for their stability over the smaller companies.

  • The investment style further classifies the funds as value, growth, blended or opportunity funds.
  • Blue-chip companies are known to weather downturns and operate profitably in the face of adverse economic conditions, which helps to contribute to their long record of stable and reliable growth.
  • It is a good source of investment for all such investors who do not want to let their investment be affected due to market volatility.
  • A recent routine inspection in August 2019 was carried out by SEBI, the Exchanges and the depositories.
  • It has been in use ever since, originally in reference to high-priced stocks, more commonly used today to refer to high-quality stocks.

The Quality Score is based on company’s financial and management quality and long term performance. Quality scores above 55 are considered good and below 35 are considered bad . While redemptions made after one year attract long term capital gains tax . Kindly suggest if arbitrage funds are ok for earning high returns with low risk. The name “blue chip” came about from the game of poker in which the blue chips have the highest value.

Best Liquid Funds to Invest in 2021

The blue-chip fund is one of the many types of schemes that mutual fund offers. Let us dive into this topic to understand if this type of fund could help you achieve your financial goals. At the same time, investment objectives such as retirement planning, the future of the child, etc. can be met by investing in Blue Chip Funds. Until now, the scheme has delivered the yields that have helped many investors earn significant revenue over time. Investors can achieve their investment objectives effectively by accumulating an enormous corpus in the future.

Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law. Having explained blue-chip fund meaning and features, let us analyse why they are a good investment option. Please note that SEBI has restricted us only from acquiring new customers until the matter is resolved. They have given us 21 days to give a comprehensive response to their prima facie findings, and issued an interim order. There is NO BAN at all whatsoever, except a restriction on onboarding new customers for a twenty-one day period.

He has authored books on technical analysis and foreign exchange trading published by John Wiley and Sons and served as a guest expert on CNBC, BloombergTV, Forbes, and Reuters among other financial media. Financially speaking, a blue chip is a company renowned by name or brand and needs little introduction. It offers widely-accepted products / services that command value in the market. This reflects in the company’s financials like sales, profitability and dividends, among other parameters.

  • Choosing the right fund should be a factor of your age, risk tolerance, investment horizon, etc.
  • A blue-chip company is a multinational firm that has been in operation for a number of years.
  • Those of you who have attempted to research mutual funds may have felt overwhelmed with the hundred different types of mutual fund categories; it is easy to get lost in the jargon.
  • The name “blue chip” came about from the game of poker in which the blue chips have the highest value.
  • Generally, the younger you are, the more investible surplus can be allocated to mid-cap funds.

While this can be an advantage during an economic downturn, it can be a problem in a bull run. During the bullish phase, the stock prices might not see a lot of growth when compared to mid or small cap companies. The remaining 20% of the total assets across other asset classes and categories. For example, the portfolio manager invests in mid cap stocks or bonds or in cash equivalents. Blue chip companies are very large companies with good financial stability and a large distribution network. Blue chip companies have good recognition both in the home country and abroad.

Systematic Investment Plan (SIP)

These stocks are great for capital preservation and their consistent dividend payments not only provide income, but also protect the portfolio against inflation. In his book The Intelligent Investor, Benjamin Graham points out that conservative investors should look for companies that have consistently paid dividends for 20 years or more. A blue chip is a nationally recognized, well-established, and financially sound company. Blue chips generally sell high-quality, widely accepted products and services. Blue-chip companies are known to weather downturns and operate profitably in the face of adverse economic conditions, which helps to contribute to their long record of stable and reliable growth.

In this article, we will learn more about blue-chip funds, how they work and much more. To live a comfortable life with high norms, financial stability is essential. This scheme also has investments in the money market tools that provide for recurrent revenue and consequently guarantee consistency. We can readily achieve our economic need for stable revenue by investing the hard-earned cash in Blue Chip Funds. The fund’s top 5 holdings are in ICICI Bank Ltd., Reliance Industries Ltd., Infosys Ltd., HDFC Bank Ltd., Tata Consultancy Services Ltd.

bluechip fund meaning

Individuals looking for short term investments can invest in debt funds. The investment strategy of some large-cap funds may allow a strategic allocation to mid-caps as well. Here, fund managers may invest upto 30% of the portfolio in stocks outside the large-cap bucket.

Read more about our Products & Services

The companies are likely to withstand the economic downturn, market volatility and are a good investment option. Bluechip stocks are known to operate profitably even in adverse market conditions, which adds to the stability and performance of a bluechip fund. Please read all scheme related documents carefully before investing. A scientifically curated portfolio of mutual funds designed to provide growth as per your goal requirements, while managing risk.

They are more financially stable and more resilient to market volatility than mid and small caps. Hence investors who want equity exposure with a moderate understanding of risk can invest in bluechip funds. Equity funds aim to provide capital growth by investing in the shares of individual companies. Any dividends received by the fund can be reinvested by the fund manager to provide further growth or paid to investors.

  • If you choose the right blue-chip company you might be offered a regular, steady dividend.
  • Over a 10 year period, mid-cap funds delivered an average compounded return of approximately 14% , compared to 11% delivered by the large-cap fund category.
  • If you are thinking of entering the ‘the world of Share Market or Stock Market’, but do not know where to begin from, reach out to us on the below provided contact details or visit us personally at any of our branches.
  • We want to reiterate once again that nowhere in the SEBI order has an amount of Rs 2000 crores been mentioned, and that this number together with the word default is extremely misleading and damaging to our reputation.

It helps if you don’t blindly pick a scheme just because it has Blue Chip in its name. Blue Chip Fund is an open-ended scheme that can be redeemed or withdrawn whenever required by the investor. A simple withdrawal enables investors to encash their investments in moments of uncertainty without burdens of debt.

What Makes a Company a Blue Chip?

Hence, these companies earn a stable profit and pay out regular dividends. These mature businesses are less volatile and deliver a stable return over the long-term. Some well-known blue-chips are Tata Motors, Infosys, HDFC Bank, ITC, etc. Next time you want to invest in a well-diversified equity fund with stable return potential, don’t get bogged down by their names. Look for the category they fall into and if they are classified as large cap funds, that’s where you need to carry out your next step of analysis and selection before finalizing a fund. There is a perception among investors that blue chips can survive market challenges of many kinds; while this may be largely true, it is not a guarantee.

What is Mutual Fund NAV?

Hence, they can have a more significant portion of their portfolio invested in stocks and equities. It consists of around 60%-70% of your portfolio and lends stability to it. Blue-chip mutual funds are ideal for long-term goals as the longer you stay invested, the higher the probability to earn more returns. You can invest in blue-chip funds to create your retirement corpus, fund higher education for your children, etc. In case you missed it, PersonalFN has launched a new service through which you can strategically align your portfolio to ride the market waves.

Tags: No tags

Add a Comment

Your email address will not be published. Required fields are marked *