Blue chip mutual funds invest in stocks of these companies that have a reputation for paying regular dividends and registering profits consistently over a long period. Blue Chip funds, which are essentially equity funds, are known to be one of the safest and reliable investment options.
Blue Chip mutual funds invest mostly in stocks of the top 100 firms by market capitalisation. For a little diversification, these funds can invest in bonds and cash equivalents. Younger investors can bear the higher risk that comes with investing in these stocks as they have a longer investment horizon.
A blue-chip stock is a stock from the market's highest-quality companies and is known for their low risk and reliable performance. Blue-chip stocks are stable and pay high dividends, but they're typically expensive and don't grow much.
Blue-chip stocks are not high risk, so they're popular among investors with lower risk tolerance. While blue-chip stocks aren't bulletproof, their history of resisting market downturns makes them an appealing choice for many investors.
Counting on blue-chip stocks to perform well can be risky. These stocks can "can lag the market index in a bull market, lose market share to smaller companies or suffer from poor management practices," Kulak says.
Blue chip stocks are usually less risky and thus considered safer than other stock-based investment options. That's because one of the major determining factors of a blue chip stock is that it must be a well-capitalized company, meaning it should have the financial fortitude to endure an inevitable economic downturn.
Because blue chip companies are relatively stable, blue chip stocks are considered a low-risk investment. In all likelihood, no matter what happens tomorrow, the most established companies in the banking or real estate sector would not to collapse overnight, so investing in them is a relatively safe bet.
Blue-chip stocks are those stocks that offer consistent returns and have minimum risk attached. Such stocks are ideal for those investors who want secure returns. 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.
Some blue chips, such as Apple and Pfizer, take the hit and keep on chugging.
Axis Bluechip Fund has performed better than its peers in last few years. The fund has generated CAGR of 8.82% in last 5 years. The returns have come down considering the fall in market after Corona Outbreak. Still it has maintained better returns than other funds.
Due to the asset class nature, expect volatility in your investments over the short term. The fund is benchmarked to IISL Nifty 100 TR INR. ICICI Prudential Bluechip Fund (G) is rated as a 3 fund in Equity and delivered 4.4% returns in the last 1 year.
Shares of IT blue-chip companies such as Infosys, TCS (Tata Consultancy Services), HCL Technologies and Wipro were among the top gainers on the domestic bourses in Thursday's trade.
The SBI Blue Chip Fund is an open ended large cap mutual fund. It, being an open ended fund, gives the investors an opportunity to continue accumulating as many units as they can. An open ended mutual fund usually does not have any restrictions on the number of units that the fund house can allot to investors.
The risk grade assigned to the SBI BlueChip mutual fund is moderate, and thus the investments are less prone to failure. SBI Bluechip Fund Growth has maintained the 5-star ratings for a long time, and hence is the most effective investment plan for a long-term investment.
Investing in Blue Chip stocks is recommended for investors with a conservative risk profile to meet their long term goals of at least 5-7 years. But investing in these companies is ideal for all investors to grow their wealth over a long period without exposing themselves to a lot of risk and volatility.
In general, the average rate of return on blue-chip stocks is around 10%, which is similar to the indices that they are featured on.
Examples of blue-chip stocks
Apple. Coca-Cola. Disney. IBM.
When to sell? If a blue chip company has suddenly gone up 40-50% & nothing wonderful has happened with the company with no pleasant surprises ahead then one can replace it with another less valued blue chip company. In the same situation, if one don't want to sell all of it, one could sell some of it.
Investors also appreciate the dividends blue-chip stocks typically pay. Dividends are especially attractive if you're investing for income, as many investors do in retirement. Blue-chip stocks tend to pay reliable, growing dividends.
Blue-chip stocks are ones instantly recognized as established, dominant names in their respective industries. Take Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and The Coca-Cola Company (NYSE:KO), for example.
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.