Whether you are an experienced trader or an amateur investor, a safe investment option is always required to preserve capital and ensure better returns. For those seeking a reliable and comparatively safe investment option, blue-chip mutual funds must be explored. Read on to learn more about blue-chip mutual funds and what kind of advantages they offer.
What Are Blue Chip Mutual Funds?
Blue chip mutual funds are investment funds that primarily invest in large-cap stocks. These shares belong to well-established companies, usually, the top 100 companies listed on the stock exchange. Such funds focus on large, well-established companies that have a strong financial record.
The aim of investing in a mutual fund is to offer steady and long-term growth by guaranteeing a relatively low risk. Certain blue chip mutual funds pay regular dividends which provides stability during highly volatile periods.
For instance, Mirae Asset Emerging Bluechip Fund had a strong track record. It has given a return of 19.41% in one year and a return of 20.33% over five years. This makes it an ideal investment option for those who have a long-term investment horizon and are seeking a safe investment option.
Advantages of Blue Chip Mutual Funds
Here are a few major benefits of investing in bluechip mutual funds for investors:
1. Reputed Companies
Blue chip mutual funds often belong to reputed companies with a strong financial record. These companies have a firm reputation, are stable, and have performed consistently in the past. Therefore, these companies can withstand global economic fluctuations making it a safe option for young investors.
2. Capital Development and Preservation
Capital growth and capital preservation are the essential features of blue-chip mutual funds. Ideal for long-term investors, these mutual funds offer a balanced approach that includes protecting the investment amount while appreciating.
3. Defensive Advantage
In times of inflation, blue-cap mutual funds stand out as an investment option. Blue-chip mutual funds of companies that belong to healthcare, FMCG, and so on provide a buffer against inflation as they remain essential even during periods of inflation.
4. Fiscal Stability
Companies with a strong financial record are reliable as they are generally not under debt or any other kind of financial strain. The revenue stream is consistent which makes these companies stable. Owing to this creditworthiness, such blue-chip funds have a strong reputation as they have proven to have consistent and stable revenue growth.
5. Professional Management
Conducting thorough research and an in-depth analysis of the finances of a company is done by professional account managers. They keep a tab on economic trends and can anticipate the improvement or deterioration of the fund. Therefore, their main purpose is maximizing returns while minimizing potential risks.
6. Liquidity
Units of mutual funds can be bought or sold as per the investors’ requirements. Since these funds are invested in well-established stocks, the trading volume is very high. This offers flexibility to investors as they can access their investments without any significant delays.
7. Portfolio Diversification
When it comes to spreading risks, investing in blue-chip funds from multiple reputed companies is effective. For instance, if a sector faces a downturn, companies from other sectors maintain stability. The aim is to avoid reliance on a single sector and adjust risks to ensure long-term, sustainable growth.
Conclusion
Blue Chip mutual funds are a great way to diversify a portfolio and appreciate capital. Under the supervision of an experienced professional fund manager, this investment vehicle is resilient to global economic fluctuations. Being associated with reputed companies, blue-chip mutual funds are liquid, offering flexibility and peace of mind to investors as they can withdraw the principal amount according to their wishes and will.
