Are you planning to invest in structurally strong and large companies? Imagine having to buy stocks of each of these companies. Buying even a single stock of bluechip companies can be expensive. However, buying a basket of the stocks as a basket through active funds or passive funds India could be a systematic, convenient and pocket-friendly option.
These funds can help you ride over the stock market wave and help your portfolio with a higher returns potential.
There are a number of bluechip funds available through top fund houses or Asset Management Companies (AMCs) in India. Let us learn about bluechip funds meaning, top bluechip funds and benefits and risks of these mutual funds in detail.
What Are Bluechip Stocks?
Bluechip companies are large cap companies characterised by their long history of stable earnings, consistent dividend payouts, and a reputation for quality and reliability. They often hold dominant positions in their respective industries, demonstrating a proven ability to weather economic storms and market fluctuations. You can think of them as the bedrock of the stock market, offering investors a sense of security and confidence. While they might not exhibit the rapid growth of younger, more agile companies, they provide a sense of stability and steady returns, much like the oak tree provides shelter and sustenance in the forest. Investing in blue-chip companies is akin to seeking refuge under the canopy of these giants, knowing they have weathered countless storms and emerged stronger each time.
Here is how you can compare bluechip stocks to other stocks (midcap, small-cap):
Thinking of the stock market as a vibrant fruit basket, blue-chip companies are akin to the ripe, juicy mangoes or plump, sweet grapes. They represent established quality, reliable flavour, and consistent satisfaction. These are the fruits you can always count on for a delightful experience, much like how blue-chip companies deliver consistent earnings and dividends. They might not be the most exotic or surprising fruits in the basket, but they offer a dependable sweetness and nutritional value, just like blue-chips provide stability and steady returns in an investment portfolio.
On the other hand, smaller, high-growth companies can be compared to the more exotic fruits in the basket – the tart starfruit, the tangy passionfruit, or the surprising rambutan. They offer the potential for a unique and exciting flavour experience but might not always deliver on expectations. Similarly, these companies can offer explosive growth but also carry higher risk and uncertainty. And then there are dried fruits like raisins or apricots – they represent established companies that have matured and preserved their value over time. Like dried fruits, these companies may not offer the same juicy growth potential as fresh fruit, but they provide concentrated value and long-lasting sustenance, much like how established companies offer stability and consistent dividends.
Top Bluechip Mutual Funds In India
Here are the top bluechip mutual funds in India:
| S No. | Fund Names | TER (in %) | 1 Yr Returns | 3 Yr Returns |
|---|---|---|---|---|
| 1 | ICICI Prudential Bluechip Growth Direct Plan | 0.87 | 32.45% | 16.15% |
| 2 | Bank Of India Bluechip Growth Direct Plan | 1.26 | 32.35% | 13.33% |
| 3 | Canara Robeco Bluechip Equity Growth Direct Plan | 0.48 | 31.63% | 13.05% |
| 4 | ICICI Prudential US Bluechip Equity Growth Direct Plan | 1.08 | 31.51% | 12.48% |
| 5 | Kotak Bluechip Growth Direct Plan | 0.60 | 30.74% | 13.03% |
| 6 | Franklin India Bluechip Growth Direct Plan | 1.07 | 30.25% | 10.69% |
| 7 | SBI Blue Chip Growth Direct Plan | 0.80 | 25.33% | 12.22% |
| 8 | Axis Bluechip Growth Direct Plan | 0.67 | 23.31% | 7.02% |
Source: Accessed through Kuvera portal on 13/11/2024
These are largecap equity funds that invest exclusively in top bluechip company stocks.
Benefits Of Investing In Top Bluechip Mutual Funds
Let us learn more about the advantages of investing in top bluechip mutual funds in India. Here is an analogy of the banyan tree to help you understand this better:
1. Stability and Security
Just as the banyan tree stands tall and steadfast, with its vast network of roots anchoring it firmly to the ground, bluechip companies possess a strong foundation and resilience. They have weathered economic storms and market volatility, demonstrating their ability to withstand challenges and emerge stronger. Investing in blue-chip mutual funds provides a sense of security and stability, knowing that your investment is backed by these resilient giants of the market.
2. Consistent Growth Potential
The banyan tree, with its expansive canopy and abundant foliage, symbolises growth and prosperity. Similarly, bluechip companies have a history of steady growth and profitability. While they might not offer the explosive growth of younger companies, they provide consistent returns over the long term, helping your investment portfolio grow steadily and reliably.
3. Regular Income Stream
The banyan tree generously offers its fruits, providing nourishment and sustenance. Likewise, top bluechip companies often have a long-standing tradition of paying dividends to their shareholders. Investing in blue-chip mutual funds allows you to participate in this regular income stream, providing a steady flow of returns to supplement your financial goals.
4. Resilience and Dependability
The banyan tree withstands the test of time, enduring changing seasons and occasional storms. Similarly, blue-chip companies have proven their ability to navigate economic cycles and market fluctuations. They act as a stabilising force in your investment portfolio, offering a sense of dependability and resilience amidst market uncertainties.
5. Building a Strong Foundation
Just as the banyan tree provides a solid foundation for its expansive branches, top bluechip funds can form the bedrock of your investment strategy. They offer a reliable base upon which you can build a diversified portfolio, adding other investment options to pursue higher growth opportunities while maintaining a core of stability.
In essence, investing in top bluechip mutual funds in India is akin to cultivating a strong and dependable banyan tree in your financial garden. It offers stability, consistent growth, regular income, and resilience, providing a solid foundation for your long-term financial well-being.
Risks Involved In Top Bluechip Equity Mutual Funds
While top bluechip mutual funds are often considered a reliable investment option, it is essential to be aware of the potential risks:
1. Company-Specific Risks
Even established companies can face challenges. Let us look at the company-specific risks.
(a) Changing Consumer Preferences
A shift in consumer demand can impact a company’s products or services, affecting its profitability.
(b) Increased Competition
New entrants or innovative competitors can disrupt the market share of established companies.
(c) Technological Disruptions
Advancements in technology can render existing products or services obsolete, impacting a company’s competitiveness.
(d) Limited Growth Potential
Blue-chip companies, while stable, might not offer the same high-growth potential as smaller, more agile companies. Their large size and established market presence can sometimes limit their ability to achieve rapid expansion.
2. Market Risks
Top blue-chip mutual funds, although diversified, are still susceptible to overall market fluctuations.
(a) Economic Downturns
Recessions or economic slowdowns can impact consumer spending and business investments, affecting even stable companies.
(b) Geopolitical Events
Global events, such as political instability or international conflicts, can create market uncertainty and volatility.
3. Interest Rate Changes
Fluctuations in interest rates can impact borrowing costs and consumer spending, affecting company profits and stock valuations.
Understanding these potential risks allows you to make informed investment decisions and manage your expectations accordingly. Diversification, thorough research, and staying informed about market trends can help mitigate these risks and enhance your investment outcomes.
Wrapping Up
Investing in top bluechip mutual funds can be better than buying bluechip stocks directly. However, with the advantages, there are also risks involved in bluechip mutual funds investing. A diversified and balanced portfolio approach that can align with your financial goals can therefore be better.
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