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Posted on 1/12/2021 9:00:00 AM

Large caps funds are also known as or coined as Blue chip funds. Blue chip mutual funds are a type of equity funds that primarily invest in equity and equity related securities of large cap companies that can be distinguished by adjectives such as large and well-established, renowned and prestigious. As per SEBI guidelines, the large cap stocks represent established enterprises selected from the top 100 stocks by market capitalization. These companies generally enjoy a competitive edge, have a sustainable market share and are expected to grow over next 5 years and more. In line with their name, blue-chip funds can be seen as financially sound schemes that showcase a good track record in terms of the chances of getting decent returns as well as skilled management.

Typically, blue chip funds are categorized under equity mutual funds, and here are some distinguishing features –

  • Since investments can be made in equity, blue-chip funds can help investors get capital appreciation by staying invested over the long term.
  • Blue-chip mutual funds may have the ability to offer consistency in their investments and returns, which may suit even the conservative investors.
  • Due to the fact that these funds invest in companies which have a known and accomplished performance record in the markets, they can be considered as suitable investment avenues for investors seeking to stay invested over the long term to achieve their goals.
  • Bluechip funds can be a good option if you are looking for some growth in your portfolio as the ‘bluechip’ companies have stable and experienced management with expert corporate governance.
  • Being an open-ended mutual fund investment, investors can choose to enter and exit these funds according to their investment strategy, keeping in mind the exit load (if any).

Before making investments decisions, it is advisable that investors understand the expense ratio, exit load (if any) and tax implications of investments in these mutual fund schemes. Investors should understand the valuation of these funds before planning to invest in them. It is advisable to diversify your portfolio and aim to get maximum benefit through your investments. At the same time, it may help to relate one’s financial goals, risk appetite and time horizon before moving further.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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