If you have ever tried your hand at poker, you’d know that the blue-chip traditionally has the highest value out of all the other casinos token.

Assuming that a red chip is valued at Rs. 200 and a red chip is worth Rs.700, a blue chip could be worth about Rs. 3000. The name ‘Blue Chip’ is derived from poker due to the high-risk involved in gambling essentially.

The Blue Chip Companies are the ones who are currently leading in the Industry. These industries could include companies like Mc Donalds’, Nike and Microsoft which are at the top of the particular goods they offer. They are generally well-received, established, and organizations which are financially stable.

Bluechip or large-cap funds are equity funds that primarily invest in companies that have a market capitalization between 1-100. These funds are preferred by investors who do not have a large risk appetite, but at the same time want to obtain decent returns from their investment.

Salient Features of Bluechip Mutual Funds

stock market effect general elections

  • Market Capitalization

The Market Capitalization of bluechip companies is very high, in millions and billions. Due to this, they are also known as large-cap stocks.

They generally manage to deliver thoroughly with less market volatility as compared to mid and small cap funds. It is a relatively stable option for investors.

  • Relatively Stable

The Bluechip companies are capable enough to combat downturns and scenarios like adverse markets and operate productively, under most cases due to their previous credible and long track records.

The elasticity to deal with issues adds to their long history of steady and stable development. One of the best examples in this regard is the market fall of 2008. Investors who had invested in bluechip funds, ended up losing less money as compared to other equity fund classes.

  • Returns

These funds provide moderately high returns. In the sense that, their returns are higher 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 is directly proportional to the risk grade.

Moreover, the management teams and the administration is well versed and knowledgeable which further add to the desirability and a sense of security among the investors.

How do Bluechip Funds work? Why do they Matter?

As mentioned above, these funds are equity funds. Hence, these invest in the stocks and shares of companies that have a market capitalization of 1-100.

This may be thought that a corporation’s assets and incomes are used as a security or a liability against the stock. The investments in bluechip mutual funds are ideally made with the intent to create wealth over a long period of time, however, it is not necessary

For those investors who are jittery about these kind of stocks that fall under the equity category, It’s highly unlikely that a company like Coca-Cola would suddenly stop manufacturing coke after five years. A person approaching retirement can also consider investing in large-cap stocks

However, if one is looking to invest in just bluechip stocks, diversification of the portfolio by acquiring other stocks and shares would tackle any likely risks and also increase returns (if investor invest in high-risk funds).

Assuming that someday, you realize that a high-end company like Pepsi receives massive backlash by people all around the world for an insensitive content or ad campaign or Walmart performs terribly at their earnings report.

Which Is the Best Time to Invest in Bluechip Funds

If there is a market fall or a bear phase, is when you should ideally look to invest.

Why?

Because the units are cheaper. Also because you get to buy the units at a cheaper price and once the market recovers, the returns provided will eventually increase and you can redeem it at a higher price (once your investment goals has been reached).

Advantages of Investing in Bluechip Funds

The two major advantages are:

  • Suitable for investors with a moderate/low-risk appetite

Investors with a relatively low-risk appetite could invest in bluechip companies because they are more consistent and provide stable returns.

  • Investing in the big league

When you invest in a large-cap fund, you are putting your money in big-wigs. These companies are the market leaders and therefore the investor’s trust factor is greater in these funds.

Disadvantages of Investing in Bluechip Funds

best mutual fund with moderate risk

  • Comparatively Low Returns

As mentioned previously, the returns are low compared to other funds in the equity segments. But this fund comes with its own benefits as its less volatile. Therefore, investors who prefer obtaining high returns, in exchange for risk, should not opt for this fund.

  • Higher Exit Load

Large-cap funds are known to have higher exit load. Exit load is the amount an investor has to pay if he/she leaves/exits from the mutual fund.

Let’s check out some of the best bluechip funds that an investor can consider putting his/her money in.

5 Best Bluechip Funds - At a Glance
Fund Name 1Y 3Y 5Y Expense Ratio Turnover Ratio Category Risk
SBI Bluechip Fund - Direct - Growth 6.23% 11.31% 13.93% 1.08% 73% Equity
(Large Cap)
Moderately High
Reliance Large Cap Fund - Direct - Growth 11.26% 15.8% 13.95% 1.21% 79% Equity
(Large Cap)
Moderately High
Axis Bluechip Fund - Direct - Growth 12.05% 16.66% 13.56% 0.87% 41% Equity
(Large Cap)
Moderately High
Aditya Birla Sun Life Frontline Equity Fund - Direct - Growth 5.34% 11.56% 11.8% 1.12% 25% Equity
(Large Cap)
Moderately High
ICICI Prudential Bluechip Equity Fund - Direct - Growth 8.43% 14.17% 12.52% 1.2% 144% Equity
(Large Cap)
Moderately High

1. SBI Bluechip Fund

This is a Large Cap Equity Oriented Mutual Fund launched on January 1, 2013. It is a fund with moderately high risk and has given a return of 18.03% since its launch.

Invest in SBI Bluechip Fund Now

Rating by Groww 4 star
AUM (Fund Size) ₹19,097 Cr
Minimum SIP ₹500
Performance w.r.t its Benchmark Has consistently outperformed its benchmark BSE S&P 100 since its launch.
Age of the fund 5 years old
Expense Ratio 1.35 %

2. Reliance Large Cap Fund

This is a Large Cap Equity Oriented Mutual Fund launched on January 1, 2013. It is a fund with moderately high risk and have given a return of 16.91% since its launch.

Invest in Reliance Large Cap Fund Now

Rating by Groww 5 star
AUM (Fund Size) ₹11,070
Minimum SIP ₹100
Performance w.r.t its Benchmark Has consistently outperformed its benchmark BSE S&P BSE 200 Fund since its launch.
Age of the fund 5 years old
Expense Ratio 1.26%

3.Axis Bluechip Fund

This is a Large Cap Equity Oriented Mutual Fund launched on January 1, 2013. It is a fund with moderately high risk and has given a return of 16.55% since its launch.

Invest in Axis Bluechip Fund

Rating by Groww 5 star
AUM (Fund Size) ₹2,927 Cr
Minimum SIP ₹1,000
Performance w.r.t its Benchmark NIFTY 50 Total Return
Age of the fund 10 years old
Expense Ratio 0.91%

4. Aditya Birla Sun Life Frontline Equity Fund 

This is a Large Cap Equity Oriented Mutual Fund launched on January 1, 2013. It is a fund with moderately high risk and has given a return of 16.67% since its launch.

Invest in Aditya Birla Sun Life Frontline Equity Fund Now 

Rating by Groww 4 star
AUM (Fund Size) ₹20,702
Minimum SIP ₹1,000
Performance w.r.t its Benchmark Has consistently outperformed its benchmark S&P BSE 200 since its launch.
Age of the fund 5 years old
Expense Ratio 1.29%

5. ICICI Prudential Bluechip Equity Fund

This is a Large Cap Equity Oriented Mutual Fund launched on January 1, 2013. It is a fund with moderately high risk and has given a return of 16.52% since its launch.

Invest in ICICI Prudential Bluechip Equity Fund Now

Rating by Groww 4 star
AUM (Fund Size) ₹16,539
Minimum SIP ₹1,000
Performance w.r.t its Benchmark Has consistently outperformed its benchmark NIFTY 50 Total Return since its launch.
Age of the fund 5 years old
Expense Ratio 1.26%

The Bottom Line

If you want to invest in a fund which provides decent returns and are willing to invest for four years or more, bluechips can be a considerably good option.

This is everything an investor needs to know about bluechip funds and if you want to explore more funds, you can checkout the Groww website and invest according to your risk appetite and ideal investment horizon.

Happy Investing!

Disclaimer: The views expressed in this post are that of the author and not those of Groww