What is a Blue Chip Fund & How Does it work? | Trend Guru Blog |

Table Of Contents

  • BLUE CHIP FUND MEANING
  • WHAT IS A BLUE-CHIP FUND?
  • THE FUNCTIONING OF A BLUE-CHIP MUTUAL FUND
  • DIFFERENT CATEGORIES OF EQUITY FUNDS.
  • BLUE CHIP FUND-MEANING, PROCESS, AND MANY MORE
  • BENEFITS OF INVESTING IN BLUE CHIP FUNDS
  • INVESTING IN BLUE CHIP FUNDS
  • SALIENT FEATURES OF BLUECHIP MUTUAL FUNDS
  • THE BOTTOM LINE

BLUE CHIP FUND MEANING

A blue-chip fund is a strategy to invests in blue-chip shares. The stocks of blue-chip funds provide huge profits and enhance an investor’s portfolio. Prominent brands with extraordinary sales and profits fall under the blue-chip fund. They give trustworthiness and safety to the investors. A Blue-chip mutual fund is moreover perceived as a - "growth fund".

When a fund gives over 65% of the portfolio in stocks the fund is regarded as equity funds. The capital that is raised is commonly put in equity-related and equity funds. Owing to their priority on stocks, equity funds are moreover known as stock funds. An equity fund is commonly illustrated based on its themes and sector, market capitalization, and style of investment.



WHAT IS A BLUE-CHIP FUND?

A blue-chip fund is a sort of mutual fund that puts wealth in blue-chip stocks or shares. The blue-chip investment is usually made in organizations that are renowned and well-established brands with a promising financial track record in terms of sales returns, profitability, and earnings. Blue-chip funds tend to generate returns even in hostile and volatile market circumstances.

Mutual funds that invest in blue-chip shares or stocks are moreover named as - "growth funds"; a blue-chip investment is considered to be a prudent, stable, and most reliable investment owing to their comparatively lesser volatility to the smaller organizations.

A blue-chip fund is also an equity scheme that gives its investors great financial performance. Such funds help in a catastrophe, strengthen the investments, and enhance the investor’s portfolio. The shares of a blue-chip fund are in organizations that have developed high returns for their investors for many years. Their sales develop good returns for investors. Furthermore, the risk with such funds is usually low.

The market capitalization of blue-chip funds is very impressive. Blue-chip stocks can moreover be costly as their demand is always huge. The years of profitability of blue-chip funds make them a practical investment scheme, which is why plenty of investors hope to get them in their portfolio.

THE FUNCTIONING OF A BLUE-CHIP MUTUAL FUND

Blue-chip mutual funds allow investors to gain advantages from the all-around financial growth of blue-chip companies. Though Blue-chip mutual funds are primarily invested in blue-chip stocks, investors can moreover invest them in a different classification like bonds, cash, or mid-caps for diversification. Blue-chip investment can demonstrate to be very helpful for those Investors who have put their wealth in an equity fund for a long-term financial objective to accomplish like children’s education, retirement planning, or children marriage.

Blue-chip mutual funds invest in the equity stocks of blue-chip organizations. The fun can be easily shaped in bonds, mid-cap stocks, etc. People who can take a bit of risk should invest in blue-chip equity funds, while investors who wish to gamble safely can invest in bonds. Blue-chip funds assist investors to boost their finances as they provide higher and safer returns to their investors.

While blue-chip mutual funds give high returns, an investor needs to be observant. Even the highly-rated organizations can languish sometimes and cause losses to the people who have invested in their shares.

DIFFERENT CATEGORIES OF EQUITY FUNDS.

Equity funds can be categorized based on the fund's investment requirement and the type of sectors and stock.

• Based on themes and sector:

The kinds of quality funds that invest in a specific theme or sector come under this classification. In the case of sector funds, investments are made in a particular industry like Pharma, IT, or FMCG. In the case of thematic funds, investments are made in multinational stocks or rising consumer organizations. Both are mainly robust and dependent on a sort of industry and thus are supposed to be unpredictable and equity funds that are diversified in nature. Thematic and sector funds can moreover be diversified but in terms of their market capitalization.

• Based on Market Capitalisation:

More than constantly, the large-cap equity funds put wealth in large-cap stocks that are stocks of the economy’s massive listed organizations. The organizations that make large-cap funds are reliable and safe investments. The mid-cap equity funds and the small-cap equity funds put their wealth in organizations that are medium and small-sized. The medium cap and small-cap funds give unstable returns owing to disposal towards market volatility but they moreover have the potential to thrive over time due to advancement in their growth in the share market. There installed mid-cap fund where equity fund puts their wealth in both small and medium organizations. Specific equity funds moreover invest in small-caps, mid-caps,large-caps stocks and are comprehended as multi-cap funds.

• Based on Style of Investing:

The above-mentioned funds follow an effective investing style, where the fund executive adjusts the format of the investment portfolio to suit the prevailing market circumstances. Some funds tend to pursue the theme of a fixed index in terms of its composition and are popularly understood as index funds. Index funds are passively organized and they put wealth in the same proportions, in the same organizations that form the index which the fund follows. Since Index funds don’t mandate active management they are priced lower than actively organized funds.

BLUE CHIP FUND-MEANING, PROCESS, AND MANY MORE

Investments are attributed to our objectives - they may be long-term or short-term objectives. Still, plenty of investors prefer to invest in funds that will provide them inevitable returns as such funds can be valuable in an emergency. Losses from different investments can be covered with the outputs from such high-on-performance funds.

Blue Chip Funds are stocks that serve this objective. The returns of a blue-chip fund benefit in equalizing an investor’s portfolio. The scheme can give the investors high dividends while offsetting the losses they might make.



BENEFITS OF INVESTING IN BLUE CHIP FUNDS-

Consistency in Returns

Consistency in profits is a characteristic that every investor likes with their funds. It is important as profits solidify their finances. Blue-chip funds are investments that enhance an investor’s financial resilience by providing guaranteed returns.

Increase in Profits

One of the most valuable facets of why people invest is to boost their financial corpus. Blue-chip funds do specifically that for their investors. They give profits on investments and assist a person raise their wealth.

Ensuring Future Needs

Investment objectives, such as a child’s education, marriage, etc. a lot of money for retirement. Financing such things can be achieved with the assistance of blue-chip funds. You can grow a substantial financial corpus as blue-chip funds have helped many investors in meeting their financial objectives.

Blue Chip Funds Features-

  • Mutual funds schemes can be uncertain, but blue-chip funds are reliable and give low risk as they have the backing of the investors.
  • Blue-chip funds give reliable returns and investors can consistently make gains from them.
  • Blue-chip funds are accessible as they provide promising results even in undesirable conditions. Where smaller organizations might languish to make way during troubled times, blue-chip funds tend to give gains. The most significant factor that makes investors believe in blue-chip funds is the trustworthiness it gives. Blue-chip funds get the investors returns when the organizations make revenues.
  • The financial surge is due to the resilience of the shares, as many stock exchanges are made with blue-chip organizations. Blue-chip funds tend to invest in big organizations. Still, you can moreover invest in different stocks. You can accomplish diversification of funds by investing in bonds, mid-cap stocks, etc.

INVESTING IN BLUE CHIP FUNDS-

Blue-chip funds are costly as correlated to other mutual fund schemes. The reliability it gives makes it prominent and costly. Investors need to understand how these funds function. Blue-chip funds can create a portfolio more stable. Still, only investing in blue-chip funds can decrease the returns. Investors must diversify their investments from time to time.

Equity schemes, mid-cap funds, etc. can get greater returns, but they can moreover boost the risk. Still, when an individual invests in blue-chip funds, they can have an equalized portfolio. The trustworthiness of blue-chip funds can boost earnings. High or medium-risk investors can diversify their portfolios greatly with blue-chip funds. Investment in blue-chip funds for the short term might not equalize the financial corpus of an investor.

In disastrous situations, blue-chip funds give reliable returns as distinguished from the different funds. Blue-chip stocks are low on risk, which is why several investors prefer them in their portfolios. Still, investors need to understand that blue-chip funds can be costly. Investors who aspire to get returns with reasonable risk can invest in blue-chip funds. Blue-chip funds tend to provide returns even when the market situations are horrible. If an investor wants a boost in dividends with stability, then they should invest in blue-chip funds.

SALIENT FEATURES OF BLUE CHIP MUTUAL FUNDS

Market Capitalization

The Market Capitalization of blue chip organizations is very huge, in millions and billions of USD. Due to this, they are moreover known as large-cap stocks. They normally managed to provide returns thoroughly with less market volatility as correlated to mid and small-cap funds. It is a relatively reliable choice for investors.

Relatively Stable

The Blue chip organizations are competent enough to withstand downturns and scenarios like hostile markets and regulate productively, in most cases due to their previous credible and long track records. The elasticity to deal with problems adds to their long history of continual and reliable development. One of the best instances in this regard is the stock market collapse of 2008. Investors who had invested in blue chip funds panned out losing less wealth as compared to different equity fund classes.

Returns

These funds give fairly high returns. In the manner that, their returns are greater than debt and few hybrid funds, but almost always lower than mid-cap, multi-cap, or small-cap funds. As you are aware returns in mutual funds are immediately balanced to the risk grade. Also, the management teams and the administration is well versed and informed which further adds to the desirability and a sense of safety among the investors.

THE BOTTOM LINE

If you wish to invest in a fund that gives decent returns and are ready to invest for 4-5 years or more, blue chips can be an extensively promising alternative.

This is everything an investor requires to know about bluechip funds and if you wish to explore more funds, you can check out our website -" Trend Guru ", and invest according to your risk appetite and ideal investment horizon in stock markets.

Happy Investing!

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