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Everything to Know About Blue-Chip Funds

By Nisha Pillay - Jan 30,2022
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A high-performing equity scheme, blue-chip funds are frequently referred as large-cap funds. Considered to be one of the high yielding mutual funds, blue-chip funds are mutual funds that invest in companies that have a larger market capitalization. These funds are associated with companies that are well-recognized and are financially stable.

These financially sound schemes are used by investors for balancing their investment portfolio to manage risk better. Blue-chip mutual funds serve highly stable funds in the long term however, these can’t be deemed as a secure investment as the most successful of companies can suffer during market crisis.

Benefits of Investing in Blue-Chip Mutual Funds:

Assured Returns:

Businesses with a proven track record can help enable you to invest in the right kind of companies which in turn can provide you with a stable investment portfolio. By delivering guaranteed returns, these well-established businesses can serve as secure avenue for most investors.

Diminished Risk-factor:

Companies with a larger market share are considerably financially stable making it a great investment avenue. The risk-factor associated with these companies is comparatively less. By diversifying your portfolio and investing in a range of blue-chip stocks, investors can further reduce the risk associated with these funds.

Long-term Financial Goals:

Blue-chip funds can prove extremely useful in achieving your long-term goals. Usually with a term of investment over 7 years, and the range of returns can help you consider this for your long-term financial goals. Ideal for scenarios such as a purchasing of a home or retirement, these funds are best suited.

Flexibility:

Blue-chip funds are open-ended investments, meaning it’s easy for you to enter and exit these investment avenues. Especially in a financial crisis, these funds can offer you the liquidity that is required. This offers added flexibility for you to withdraw your investment at any time, according to your own convenience.

Some blue-chip funds also offer the option for you to take a loan against them.

As compared to other mutual funds, blue-chips funds are usually more expensive. An extremely attractive investment option, blue-chip funds can ensure steady returns however, these might not to be the best option for small investors.

Ultimately, it’s important for all investors to do thorough research before investing in any investment avenue and that also is the case with large-cap funds such as blue-chips.

Happy investing!

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