When investing in the stock market, individuals often seek stable returns and high profits. Blue Chip funds are one such investment option that is resilient and stable as they are offered by renowned and well-established companies. With a balanced risk-reward profile, blue chip funds ensure long-term stability. Reared on to learn more about these funds and how they can benefit an investor.
What Are Bluechip Funds?
Bluechip funds are mutual funds that focus on investing in large, well-established, and financially strong companies. Unlike equity funds where investment is spread across various sizes of sectors, blue chip funds belong to companies famous for being stable even during economic downturns.
Capital appreciation and the generation of regular income through dividends make them a popular choice for conservative investors.
For example, Axis Bluechip Fund is reliable as the bank has been performing well in the past. The fund has consistently outperformed its benchmark and its peers which has made it a favorable option for long-term investors seeking stability.
5 Reasons Why Bluechip Funds Are a Reliable Choice for Investors
Here are 5 interesting reasons for investing in blue chip funds and why they are a must-have in the portfolio.
1. High Liquidity
As compared to other investment vehicles, blue chip funds are liquid. This is mainly because of investment in established companies that have large trading volumes on the stock exchange. Their open-ended nature enables investors to purchase or sell units on any business day which gives them easy access to funds.
2. Provision of Regular Dividends
Many blue chip funds distribute regular dividends to their investors. This serves as a source of regular income which is a major advantage for retirees or any person who is looking for a stable source of running income. Moreover, these companies have a proven track record of performance. Therefore, payment of dividends is often regular. These funds are managed by expert professionals who make the best decision on behalf of an investor.
3. Comparatively Low Risk and High Resilience
Blue chip funds are considered a safe entry point for first-time investors. Instead of selecting stocks individually, an investor can begin investing in the share market by selecting one of these funds from a reputed mutual fund house. As opposed to small-cap funds, blue-chip funds are less volatile and resilient to economic fluctuations. Therefore, opting for blue chip funds can be suitable for a majority of investors.
4. Competitive Returns in The Long Run
Blue Chip funds demonstrate a track record of steady growth. Therefore, they prove to be more profitable in the long run as the market of these companies increases steadily. By investing in these firms through mutual funds, investors benefit from potential long-term market capital appreciation. These companies also deliver sustained performance.
5. Easy Diversification
Blue Chip funds maintain a diversified portfolio as they are available across multiple sectors and industries. This minimizes the risk of losses associated with concentrated investments. Blue Chip funds also provide a buffer that reduces the overall volatility of the portfolio as the funds are spread across a range of top-performing companies, banks, and other institutes.
Conclusion
Bluechip funds are reliable investment options for investors seeking sustained growth, a source of income, and comparatively low risk. With immense potential for capital appreciation, blue chip funds are ideal for first-time investors as they are also resilient to market volatility. This helps secure the financial future of investors.
