Putting your money in bluechip investments are an excellent way to achieve steady growth of your investment portfolio. While a blue chip company may have survived several challenges and market cycles, leading to it being perceived as a safe investment, this may not always be the case. The bankruptcies of General Motors and Lehman Brothers, as well as a number of leading European banks during the global recession of 2008, are proof that even the best companies may struggle during periods of extreme stress. While dividend payments are not absolutely necessary for a stock to be considered a blue chip, most blue chips have long records of paying stable or rising dividends. The term is believed to have been derived from poker, where blue chips are the most expensive chips.
Large, well-established companies are more stable compared to mid and small companies. Even during market volatility, they can offer stability because they have been in the industry for many years and have experience dealing with volatile, fluctuating markets. The blue-chip fund is one of the many types of schemes that mutual fund offers.
It is advised that you include these types of mutual funds within your overall portfolio but also diversifies across other holdings. If there are only blue-chip funds in the portfolio, you may get steady earnings but the returns would not be high. If you refer to SEBI’s product categorization circular issued in Oct 2017 that came into effect in June 2018, there is no mention of Blue chip funds under Equity Fund category. No, it just means that whatever may be the nomenclature, as long as a fund invests in the top 100 listed companies by market capitalization, it will be categorized as a Large-cap Mutual Fund. A mutual fund is an investment vehicle consisting of a portfolio of stocks, bonds, or other securities, overseen by a professional money manager. 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.
Blue Chip Funds – Know All about Blue Chip Mutual Funds
Tradebulls is here for you with its professionally trained team to offer knowledge and guide you through the same. An individual’s financial goals play an important role in their choice of investing in financial alternatives. Financial goals can be divided into short-term, mid-term, and long-term basis. These avenues include equity, mutual funds, insurance, fixed deposits, and much more. For you to tap the most out of these financial alternatives each of the investment options must be weighed rightly to know their pros and cons to make the best choice.
Its businesses straddle the entire financial services spectrum, renewable energy, data analytics, data management services and many more. Blue Chip funds are high on the costly side, and before investing in them, investors should know the value of those funds. As part of their portfolio, investors should invest in Blue Chip funds, but not as a complete portfolio. A BlueChip Fund is an equity plan that aims to provide possibilities for investors to create wealth to assist them to achieve their economic objectives. 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. An open-ended Equity Scheme predominantly investing in the large cap stocks.
- It helps you invest in financially sound companies with a track record of performance.
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- Today, blue-chip stocks don’t necessarily refer to stocks with a high price tag, but more accurately to stocks of high-quality companies that have withstood the test of time.
Other than those otherwise indicated and agreed by You, this Website do not collect or store or share your Personal Information. Aditya Birla Capital is the brand and accordingly all products and facilities are provided by respective ABC Companies as applicable. They invest largely in blue chip stocks, but they can also be invested outside that category. For diversification, these funds may also invest in mid-caps or bonds or cash.
Blue Chip Fund-meaning, Process And Many More
Although changes made to the DJIA index are rare, an investor tracking blue chips should always monitor the DJIA to stay up to date with any changes made. Although blue chips are reliably stable, they are unlikely to generate the same high returns as potentially riskier investments. Blue chip funds are offered by mutual funds, unit-linked insurance plans and other investment firms. Blue-chip companies generally do not concentrate on one sector alone; they are spread across various sectors. This means, when you invest in blue-chip funds, you are investing in stocks of top companies in multiple sectors. Even when there is instability in one industry, your investment in other sectors is not hampered, which in turn mitigates your investment risks.
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. The returns on this scheme are consistent enough that even in unplanned redemption, the investor does not suffer losses. 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.
Large-cap mutual funds invest 80% of their assets in such blue-chip stocks. Hence some AMCs choose to label their large-cap funds as Bluechip Mutual Funds. Investors keen on equity exposure but are newbies or are unnerved by the volatility of the stock markets may consider investing in blue chip funds as they are relatively stable compared to other equity schemes. If you stay invested in blue chip funds with a long-term perspective, your investments grow with consistent returns. Thus, with a long-term perspective, you may be able to accumulate a sizable corpus to meet your financial goals by investing in blue chip funds. The term ‘blue chip’ has its origins in the early 1920s when Oliver Gingold, an employee of Dow Jones, used it to define stocks trading at $200 or above.
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A benchmark is a standard against which the performance of a security, mutual fund or investment manager can be measured. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. The large cap fund category manages nearly Rs.225,000 crore of AUM and has traditionally been one of the largest and most popular fund categories in India.
The term blue-chip is borrowed from the game of poker where the chip with the highest value is represented with the color blue. Blue chip funds are believed to yield high returns when the markets are favorable and are known to survive the adverse market conditions gracefully. When you invest in blue chip funds, you do not need to sacrifice short-term income flow in order to save for long-term goals, such as retirement or your child’s college tuition.
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Are the Blue-chip Funds the right things for you?
For an investor with appetite for equities and long-term goals like retirement planning, saving for child’s education or marriage, blue chip funds either on a standalone basis or in a portfolio can prove useful. However, Equity Linked Saving Scheme qualify for tax savings under Section 80C of the Income Tax Act. Scripbox’s income tax calculator will help in calculating the tax liability, which will help in tax filing. If there is any scope of saving tax, then the calculator will help in suggesting funds for the same. One can show the investment at the time of tax filing to claim the tax deduction.
The investors are hereby requested to comply with the regulatory guidelines issued by Exchanges and Depositories from time to time with regard to KYC compliance and related requirements. To ensure smooth settlement of trades, the investors are requested to ensure that both the trading and demat accounts are compliant with respect to the KYC requirement. 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 . Actively managing a diversified portfolio of large-cap equity securities in order to achieve capital growth.
Small and mid cap companies are emerging to grow into large establishments. Hence their growth is significantly high when compared to large cap companies. But a goal-specific investment is also removed suffering losses in the event of uncertainty.
This Agreement describes the terms governing the usage of the facilities provided to you on the Website. Clicking “I Agree” to “Terms & Conditions”, shall be considered as your electronic acceptance of this Agreement under Information Technology Act 2000. These investments are capable of delivering sustainable and superior cash flows based on their past performance records. The term risk-averse describes the investor who prioritizes the preservation of capital over the potential for a high return. Blue chips are characterized by a high market capitalization, a listing on a major stock exchange, and a history of reliable growth and dividend payments. Blue-chip companies have sufficient funds to finance their business and expansion plans.
And though we know bluechip companies usually survive and perform well even during chaotic times, that may not be the case all the time. The bankruptcies of larger corporates such as General Motors, Lehman Brothers and many other leading bank companies during the recession of 2008 are proof that sometimes, even big can fail. There are many Bluechip funds in India that are well-known for their consistency and growth rate. Especially for risk-averse investors, who are looking for a steady return and dividend from their investments. For an investor with an appetite for equities and long-term goals like retirement planning, saving for a child’s education or marriage, bluechip funds can prove useful.
Hence investors seeking easy withdrawals without having to face the problem of liquidity can invest in these funds. The funds invested in the mutual fund schemes are extremely safe as SEBI and AMFI standards ensure them. By investing the money in a Blue Chip Fund, an investor can https://1investing.in/ be assured that their funds are secure and efficiently managed. 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.
These are companies with a long track record of steady growth and low volatility, suggesting that they are unlikely to face major problems in the near future. Blue chips are characterized by a high credit rating, large market capitalization, a listing on the NYSE or another major stock exchange, and are often listed in a major stock market index. The downside is that because blue chips are low risk, they also tend to have low returns. Since these companies are well-established in their industries, they also have less room to grow than smaller startups. Moreover, because their stocks are in such wide demand, blue chip stocks tend to be more expensive than other companies of comparable size. 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.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully. 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 bluechip fund meaning management with expert corporate governance. 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.