Winning Bizness Desk

Mumbai. The past year has witnessed significant fluctuations in the stock market, leaving many investors’ portfolios in negative territory. Despite this turbulence, bluechip mutual funds have managed to deliver returns of up to 17 percent, offering a safer avenue for those looking to invest in equities with comparatively lower risk. These funds primarily invest in established, financially strong companies, making them a preferred choice for conservative investors.

Stable Investment Through Top Companies

Bluechip funds allocate at least 80 percent of their corpus to the top 100 companies, including giants like Reliance, HDFC Bank, TCS, and Infosys. Shares of these companies are generally less volatile, providing a cushion against major market swings. As a result, potential losses are lower compared to mid-cap and small-cap funds.

Key Features of Bluechip Funds

• More stable than mid-cap and small-cap funds
• Less affected during market volatility
• Also known as large-cap funds
• Majority investment in top 100 companies reduces risk
• Small portion of investments may go to smaller companies

Who Should Consider Investing

Bluechip funds are ideal for a range of investors:

• Beginners entering the stock market for the first time
• Those seeking moderate returns with lower risk
• Investors planning for a 3-5 year or longer horizon
• Individuals preferring systematic investment plans with small monthly contributions

Understanding Mutual Funds in Simple Terms

Imagine 100 friends coming together to create a large piggy bank. Each person contributes a small amount every month. An experienced professional, called a fund manager, then invests this money in stocks, bonds, or gold. As the fund grows, profits are shared among all participants, and losses are proportionately divided. This collective pooling of funds reduces individual risk and allows access to diverse investment opportunities.

Types of Mutual Funds

Mutual funds are broadly classified into two categories:

1. Equity Funds: Investments in shares of companies

• Large-cap: Top 100 companies, safest option
• Mid-cap: Medium-sized companies, moderate risk and returns
• Small-cap: Smaller companies, higher risk but potential for greater returns

2. Debt Funds: Investments in bonds and government securities

• Function similar to bank fixed deposits
• Provide higher returns than FDs with lower risk
• Offer regular interest payments, suitable for risk-averse investors

Advantages of Investing in Bluechip Funds

Investing in bluechip mutual funds provides a balance of stability and growth. They offer steady returns, especially during market downturns, while keeping exposure to large, financially robust companies. For investors looking to gradually build wealth with minimal risk, these funds remain an attractive option. The combination of long-term investment potential and managed risk makes bluechip funds a reliable addition to any diversified portfolio.

Summary Pointers

• Bluechip funds returned up to 17 percent in the last year
• Invest mainly in top 100 companies, reducing market risk
• Suitable for beginners and long-term investors
• Offer stability during volatile market periods
• Managed by professional fund managers
• Include both equity and debt options for diversification
• Ideal for small monthly contributions via systematic investment plans