What are Blue Chip Mutual Funds?How to invest in Blue Chip Funds?

What are Blue Chip Mutual Funds?

Blue Chip mutual funds, also known as large cap mutual funds, pool resources from investors and invest those resources in equity or equity related instruments of large cap companies. Investors who want to earn long-term returns coupled with a moderate risk appetite should invest in Blue Chip mutual funds.

Returns generated by these funds are consistent over a long period of time owing to the ability of underlying companies to endure economic downturns.

How to invest in Blue Chip Funds?

If you want to invest in blue chip funds, you can do so in the two following ways:

Online

You can invest in Blue Chip Funds online seamlessly through online platforms  or directly through the websites of the Asset Management Companies (AMCs), offering the fund.

Offline

This conventional mode of investment requires an investor to fill a form and submit it at the nearby branch of the fund house, or invest through a broker.

Top 5 Best Blue Chip Funds for 2020

There are numerous Mutual funds in India that invest in blue chip companies. If an individual doesn’t have professional experience or knowledge about the working of financial markets or time to track the market swings, s/he can invest in blue chip funds to earn quality returns. These funds are categorized under Large Cap funds. Here is a list of top 5 Large Cap funds:

Fund Name	AUM	3 Year Return
Mirae Asset Large Cap Fund	₹13,492 crore	11.88%
Axis Bluechip Fund	₹6,501 crore	14.52%
SBI Bluechip Fund	₹21,585 crore	7.10%
ICICI Prudential Bluechip Fund	₹21,125 crore	9.55%
Pricipal Emerging Bluechip Fund	₹ 2236.32 crore	9.21%
Kotak Bluechip Fund	₹ 1388.25 crore	10.86%

What are Large Cap Funds

Large Cap Mutual Funds are the open-ended equity schemes which invest a minimum of 80% of the total assets into stocks of large cap companies. According to SEBI, companies with a market capitalization of Rs.20,000 crores or more are called large-cap companies (top 100 companies in terms of market capitalization).

Advantages of investing in Large Cap Mutual Funds

As you invest in Large Cap Mutual Funds, your fund’s portfolio is exposed to stability and sanity in which the chances of any hindrances in the revenue-generation or insolvency are low. On the other hand, small cap & mid cap companies are comparatively more affected by instability in the market

When the investments are made into companies with high growth potential and solid track record, the payments of dividend are consistent. As a result, the steady dividend payments give appealing returns to the investors

Because the large companies have been functioning in the market for many years, the performance valuation, profits and other financial specifications become easy for the investors

How to Invest in Large Cap Mutual Funds?

There are different methods through which one can invest in large cap stocks:

Offline mode– Visiting the nearest branch office of the fund house and investing in the desired scheme. You must carry all the required documents such as Identity Proof, Address Proof, Cancelled Cheque, Passport size photos, PAN Card and KYC Documents handy. You can also invest offline through a broker. However, this would then be a regular fund and not a direct fund. Think of it like a  charge brokerage which gets deducted from the total investment amount.

Online Portal– If you want a hassle free mode of investing with no commissions and brokerage, you can choose websites like Paisabazaar.com which allow the investors to compare more than 1,700 funds at one platform instead of visiting the website of each Asset Management Company (AMC) and then searching for numerous funds. You can select the fund in which you want to invest, look at the details and compare similar schemes as well as use SIP Calculator or Lumpsum Calculator to estimate the future value of your investment

Frequently Asked Questions

Q.1: Is it good to invest in Large Cap Funds?

Ans: If you are willing to invest for long-term and get higher return, large cap funds are best for investment. Moreover, they are suitable for conservative investors who are not willing to take risks. Large cap funds also bring stability to the portfolio with steady returns.

Q.2: Which mutual fund category is better for long term returns?

Ans: If you are looking for option to invest for a longer period of time, you can opt for large cap funds as these will give enough time for your money to grow and give higher returns. However, small cap funds are also good investment option to get steady returns.

Q.3: Which mutual fund category is better large cap or multi cap?

Ans: Multi cap funds invest across market capitalization and sectors, according to what the fund manager decides. On the other hand, large cap funds invest solely into large cap companies. Hence, multi cap funds could provide one with a diverse portfolio whereas, in the case of large cap funds, schemes may get affected because there can be no deviation from the planned portfolio.

Q.4: Is a large cap high risk?

Ans: No, as compared to small cap and mid cap funds, large cap are less volatile during market fluctuations because they invest in companies with high growth potential and solid business plans. Nonetheless, they invest in equity hence some risk is involved.

Q.5: What is the difference between large cap and mid cap?

Ans: Mid caps are basically companies that lie between the 101st-250th largest companies in terms of market capitalization whereas large caps are top 100 companies in terms of market capitalization. Besides this, Mid caps are riskier than large cap stocks but offer more growth potential than large caps.