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Since blue chip funds have large exposure to such stocks, their NAVs also do not suffer considerable declines in a falling market. However, it is imperative to note that the same is true in a climbing market situation too. These funds are, therefore, more stable in volatile markets than other equity schemes that invest in midcap or smallcap stocks. We often get to hear the word Blue Chip stocks and blue chip funds quite often in the context of the stock markets. Normally, a blue chip stock is not about high returns but pedigree and performance over the years. These are stocks with stable business models and established brand names.
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A small-cap stock has a total share value of $300 million to $2 billion, although the precise figures used vary among brokerages. This fund has managed an unmatched 12% returns since inception with Value Research rating 5. Outperforming its peers, the Axis Blue-chip fund is a promising one in the category. SBI Blue-chip fund has also maintained a Value Research rating of 5 for a long time. This fund is known to outperform other funds in its category and has maintained a value research rating of 5 since inception. Blue chips have typically proven track records like most Tata Companies have been around for over 100 years.
There are many large cap mutual funds in India with the word blue chip in their name. For example, SBI Bluechip Fund, ICICI Prudential Bluechip Fund, Axis Bluechip fund, etc. These are typically large, well-established, and financially sound companies that have operated for many https://1investing.in/ years and that have dependable earnings, often paying dividends to investors. A blue chip stock typically has a market capitalization in the billions, is generally the market leader or among the top three companies in its sector, and is more often than not a household name.
A scientifically curated portfolio of mutual funds designed to provide growth as per your goal requirements, while managing risk. Younger investors can bear the higher risk that comes with investing in these stocks as they have a longer investment horizon. 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.
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When it comes to financing such long-term aspirations, blue-chip funds are an excellent alternative to consider. These large corporations instantly increase the portfolio’s diversity and reduce their overall risk. This method features a minimal degree of risk, a stable rate of compounding through time, and a high rate of return. When investing in well-known companies, investors may be assure that their funds are secure.
Diversification is the key to mitigating the risk, this way if a particular investment does not perform well, diversification of funds ensure that overall return is not affected due to the earning of the other financial avenue. In the market terms, a bluechip is a company renowned by its name, brand or goodwill and doesn’t need much introduction. The products it offers are widely-accepted, that command value in the market.
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- This means, when you invest in blue-chip funds, you are investing in stocks of top companies in multiple sectors.
- This implies that the rising demand for blue chips leads their prices to be significantly higher than those of their competitors.
- Market capitalization is the total dollar market value of all of a company’s outstanding shares.
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You can invest in both Blue chip funds and Blue chips ULIPs to reap in the benefits. A diversified portfolio might include the ownership of a rash of blue-chip stocks, meaning the stocks of large, well-capitalized, well-understood companies, among a variety of other holdings. In addition to owning individual stocks, investors may also seek to have blue-chip exposure through the purchase of mutual funds or exchange-traded funds . Investing in Blue Chip funds could be the most effective approach to ensure financial security in the future. Long-term investments in blue-chip mutual funds can be use to save money for things such as a down payment on a home or retirement. A bluechip fund is a type of equity strategy that provides investors with a portfolio of stocks with a reputation for consistent financial success.
An investor must, therefore, pick a scheme that always delivers excellent yields even if the funds are all of a sudden redeemed. A Blue Chip Fund is one of the best schemes to assist you to achieve economic development and meet all your requirements. An investor investing in these stocks can track the performance by monitoring the Bluechip Index.
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. You may notice some mutual fund schemes having Blue Chip in their name and preceded by the word ‘emerging’.
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. When these funds invest outside the bluechip space, for example, in mid-caps or bonds or cash, for diversification. The investment guidelines differ for each ULIP/mutual fund and investors are informed about this through product prospectus, other literature/company websites. A financial portfolio is a collection of investments and holdings like stocks, bonds, mutual funds, commodities, crypto, cash, and cash equivalents. Numerous investors like to include blue-chip funds in their portfolios because the returns they provide over lengthy periods of time are highly reliable.
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The stock price of a bluechip company usually follows the broad market and can be expected to move in a similar range. One reason for this is that the broad market indices are mostly composed of blue chips. So the investors should understand the valuation of those funds before investing in them.
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Bluechip stocks are known to operate profitably even in adverse market conditions, which adds to the stability and performance of a bluechip fund. If you choose the right blue-chip company you might be offered a regular, steady dividend. This assures that your fund will be invested in blue-chip companies that have a proven performance record bluechip fund meaning and give you a higher return. The regular dividends can serve as the additional income source that might help you to reach your financial goals much easier. Please read the scheme information and other related documents carefully before investing. Even keeping the money idle at home or in a savings account has its own related risks.
Blue Chip Funds
They have stable, skilled, qualified and experienced management that expertly governs the company’s operations. Tick other boxes, tooIn a bear market or corporate earnings downgrade cycle, many analysts attach greater importance to PB ratio while valuing companies. Profitable companies with low P/B ratios are always preferable as they usually outperform when the market recovers, said analysts. The list is based on upside estimated by the analysts, with the highest potential stock coming on the top of the list. Blue chip stocks are huge companies with excellent reputations, often including some of the biggest household names.
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 mutual fund is an open-ended scheme, which means you can redeem or withdraw your investment whenever required. This feature proves advantageous for investors, especially in times of financial crisis, where they do not have to bear the burden of debt. With blue-chip funds, you know that you are investing in stocks of companies in the top 100 in market capitalisation. Here are a few more features of a blue-chip fund to help you decide if it is a suitable investment for you.
Is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others. A blue-chip index seeks to track the performance of financially stable, well-established companies that provide investors with consistent returns.