If you are someone who isn’t satisfied with what they are earning and are keen on investing their existing wealth in order to become financially stable in future, you are on the right track. Several individuals want to achieve financial success but do not have the heart to invest their money. They fear that they might lose their money to market volatility. However, keeping your money in the bank isn’t going to help you earn any interest. Also, savings enough might not be sufficient to help you with your financial woes. Keeping inflation in mind, you may have to start investing a portion of your savings so that over the years, they multiply and help you achieve a commendable corpus.
Over the past few years, mutual funds have become a favourite among retail investors for a variety of reasons. They are a pool of professionally managed funds that offer active risk management. Since there is a fund manager involved who is responsible for strategically buying / selling securities in quantum with the scheme’s investment objective, investors do not need to have a deep understanding about mutual funds for investing. It is the duty of the fund manager to help the scheme achieve its investment objective and, in the process, beat its underlying benchmark.
What are bluechip funds?
A bluechip fund is an open ended mutual fund scheme that invests predominantly in large cap companies for income generation. They can be categorized as large cap schemes who only invest in stocks of those companies that have a proven track record and over the years have earned the reputation for being financially stable.
Who should invest in bluechip funds?
Bluechip funds are pure equity schemes. As per SEBI guidelines, a bluechip fund must invest a minimum of 80 percent of its total assets in equity and equity related instruments of large cap companies. This means that one needs to have a long term investment horizon while investing in bluechip schemes. Equity oriented investments tend to get affected by the constant market upheavals. Over the short term, your finances might suffer but if you remain invested in bluechip schemes for the long run, your investments might be able to beat inflation and also help you earn capital appreciation.
However, investors should first understand their appetite for risk before investing in bluechip funds. Also, if you want to invest in bluechip schemes for the long run, then you can consider starting a SIP. Systematic Investment Plan is an investment vehicle where investors can invest small amounts at regular intervals in bluechip schemes. They can also refer to SIP calculator, a free online tool to help them get a rough estimate of their capital gains.
Are bluechip funds risky?
Bluechip funds predominantly invest in company stocks of financially well-established companies. Such companies dominate the markets and it is very less likely for such a company and its services to come to a standstill. A bluechip fund only picks stocks of such wealthy companies, making them a less risky as compared to small cap funds or mid cap funds. If you are looking for stable returns with minimal investment risk, then you can consider investing in bluechip funds. No investment is considered to be entirely risk free. There is always some risk involved with every investment. Be it conservative schemes like bank FDs or market linked schemes like bluechip funds, there is always a risk of losing your money. However, bluechip funds have a high risk rewards ratio and, in the past, have offered far more better results than conservative schemes.
If you want to target your life’s long term financial goals with bluechip funds, make sure to consult your financial advisor before investing.