What is Bluechip Fund with Examples?

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A blue-chip mutual fund invests mostly in large-cap companies. Long-established, successful businesses are represented by these stocks. Investing in “blue chip” companies, which have stable, experienced management and solid corporate governance, can help your portfolio develop. With open-ended mutual funds, investors have the flexibility to join or quit the fund at any time. This post will teach us a great deal more about what is Bluechip fund with examples.

If you want to attain your long-term financial goals, you might want to check into Blue Chip funds. For example, you may buy a house or save for retirement by investing in Blue Chip funds for the long term. Blue Chip companies are big, and they may have an economic moat. It gives these organizations an edge over their competitors and peers. It provides you a huge portion of the market and helps you produce money that stays up with inflation over time.

What is Bluechip Fund?

Blue chip funds are a type of equity mutual fund that invests primarily in the equities of large, well-established corporations. These are well-established businesses with a proven track record. Yet, according to the SEBI’s regulations on how to categorise mutual funds, “Blue Chip funds” are not a recognised subset. A common synonym for “big cap funds” is “Blue Chip,” a term that has been popular in recent years.

If you’re looking for a steady portfolio of equities, go no further than a blue-chip fund. Such funds could not gain as much during market upswings, but they also wouldn’t suffer significant losses during market downswings. That’s why they’re great to have on hand in case of an emergency; they boost the portfolio’s overall quality and reduce risk. A blue-chip fund’s holdings are often stocks of large, stable corporations that have provided reliable profits for years. The potential loss is minimal with these resources.

Some mutual fund plans may include “emerging” before the name “Blue Chip.” Blue Chip only programmes are for larger and medium-sized companies. You shouldn’t pick a plan at random just because it contains the words “Blue Chip.” The Securities and Exchange Board of India (SEBI) mandates that at least 80% of large-cap funds’ assets be placed in shares of the top 100 businesses based on market size. Blue chip funds are mutual funds that invest primarily in the Fortune 100 corporations.

How Does it Works?

One category of investment vehicles is large-cap mutual funds, while another is blue-chip mutual funds. Both are perpetual equity funds. They put at least a majority of their resources into major corporations. The top 100 corporations by market capitalization are known as large caps. The fund’s large-cap equities are selected by the manager based on how well they align with the fund’s investing objective. Blue chip or large cap firms are the focus of these funds since their success means higher returns.

The remaining 20% of the portfolio is spread out among several other asset classes and kinds selected by the fund manager. The manager may choose to invest in mid-cap equities, bonds, or cash equivalents. Despite being 100% equity funds, these investments have lower volatility than other equity schemes such as mid cap, small cap, value, etc. mutual funds.

The fund only buys stock in large corporations to reduce portfolio risk. Large-cap funds, sometimes referred to as “bluechip” mutual funds, have the potential to yield high returns over the long term. Therefore, long-term investment in these mutual funds is recommended. Debt funds are a good option for those looking for short-term investing.

Examples of Bluechip Funds

In India, “bluechip” is synonymous with “big cap” funds, a phrase used by most mutual fund advisors and some fund firms. Several large-cap mutual fund strategies use the term “bluechip” in their names. The Axis Bluechip Fund, the ICICI Prudential Bluechip Fund, and the SBI Bluechip are just a few examples of well-known large-cap schemes that use the word “bluechip” in their titles.

In the United States, most mutual fund advisors and schemes that have the word “bluechip” in their name also include the phrase “emerging” before it. Two major and one medium-sized firm, both with “bluechip” in their names. Common examples of such investments include the ICICI Prudential US Bluechip Fund and the Fidelity Blue Chip Growth Fund.

Characteristics of Bluechip Fund

Stocks in a blue-chip fund typically have a high rate of return and boost the overall value of a portfolio for investors. The blue-chip fund is comprised of well-known, profitable brands. They instil confidence and security in buyers. A Blue-chip fund is also known as a growth fund. Some characteristics of bluechip fund are listed below.

The Time Period of an Investment

Long-term investments typically have a lifespan of more than seven years. Blue-chip can help you achieve your long-term financial goals due to its long investment horizon. Given the above, it stands to reason that blue chips have high PE ratios due to their popularity.

Because of their consistent profitability over time, blue-chip funds are a wise choice for investors. For this reason, many financiers consider include them in their holdings. It is common for a blue chip to focus on such a corporation.

Guaranteed Profits

Blue chip stocks periodically return capital to shareholders in the form of dividends. Many investors feel comfortable putting their money into long-established businesses. Benefiting from this security is the assurance of consistent profitability.

A Warning that Something is Wrong

Blue-chip stocks are safer than those of less established companies since they are issued by large corporations with proven track records of financial success. Diversifying an investing portfolio is another way for investors to lessen the inherent risk of blue chip stocks.

Credibility and Potential for Expansion

Stock market leaders always have plenty of cash on hand to meet their financial obligations. Investors can rest assured in their purchases of these companies’ stock as a result. Those large corporations known as “blue chips” have reached their maximum potential for expansion. The gradual but consistent long-term growth of blue-chip stocks is affected by this.

Taxation on Bluechip Fund

Income from the sale of blue chip stocks is subject to taxation in India according to Section 80 C of the Income Tax Act. Gains on investments held for less than a year incur a 15% tax. However, long-term capital gains of more than Rs. 1 lakh are subject to a 10% tax rate.

Things to Keep in Mind for Blue-chip Funds

Blue chips may not offer as high returns as mid-caps and small-caps, but they are less risky than mid-caps and small-caps. Most blue chips have stable dividend payment practises, which makes it easier for shareholders to know what to expect in terms of return on investment.

List of the Bluechip Fund

You need to look at the Blue Chip fund’s portfolio to find out where your money is placed. Make ensuring that the investing goals of the large cap fund are met. Don’t be deceived by the term “Blue Chip.” Instead, check at the fund’s portfolio, as several “Blue Chip” funds are actually large cap or mid cap funds.

AMC History

Before placing your money into an AMC, you should look at its track record. It helps if you chose Blue Chip funds that handle a lot of assets under management (AUM). Also, these funds can absorb abrupt demand from wealthy investors to sell out.

Compared to the Benchmark

You can examine how the Blue Chip fund did during the last three to five years. Also, you must choose Blue Chip funds that have done better over time than the benchmark and their rivals. You can invest in mutual fund plans put up by specialists that include top-performing Blue Chip funds.

Expense Ratio

You should choose Blue Chip funds with a lower cost-to-income ratio. It’s what it costs to run the mutual fund. Also, if you choose funds with a lower expense ratio, you may make a little bit more from your investment over time.

Investment Style

You should find out how the fund management invests money and choose funds whose style you prefer. For example, the fund manager may use the growth style, the value style, or a blend of the two.


ESG Investing is also the best place for investing which you should learn about. Investors should understand about the cost ratio, exit load, and tax impacts of various mutual fund schemes before making investing selections. Before investing money into these funds, investors need know how they are evaluated. Diversifying your portfolio and attempting to get the most out of your investments is a good idea. At the same time, it may good to think about one’s financial goals, willingness to take risks, and time frame before moving forward with bluechip fund investment.

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