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Most investors want to park their money into funds that offer guaranteed returns. These funds are helpful during financial emergencies. The returns from blue-chip mutual funds aid in balancing an investor’s portfolio. They can provide investors with significant earnings and compensate for any losses they may suffer from in the future.
Many investors have achieved their financial objectives with the help of blue-chip funds. Thus, you can invest in them to build a sizeable financial portfolio.
Benefits of investing in blue-chip mutual funds
Blue-chip funds, also known as large-cap funds, are equity funds. They mostly invest in the top 100 companies of India. Consequently, the scheme provides investors with higher benefits to meet their financial goals. During a crisis, the returns from blue-chip funds are more consistent than other market-linked products. These investments increase an investor’s financial security by assuring a predictable return.
Every individual has long-term financial objectives, such as marriage, child’s education, etc. These ambitions require a large sum of money. You can use blue-chip funds to meet the demands of such endeavors.
Blue-chip mutual funds are open-ended schemes that let investors redeem or withdraw their money at any time. The convenient withdrawal process lets investors cash out their capital without having to incur debt in times of uncertainty. Generally, investors prefer to have blue-chip funds in their portfolios due to the low risk.
Who should invest in blue-chip funds?
Blue-chip funds are ideal for conservative equity investors. Due to the predominant allocation of funds in securities issued by relatively stable companies, the returns are stable. As a result, the funds are less vulnerable to fluctuations seen in the equity markets.
Investors who wish to diversify their portfolios should invest in large-cap funds. These mutual funds help you invest in stocks of leading companies across different industries. If one industry doesn’t perform as per your expectations, the other industry’s securities can help in reducing the negative impact.
It is a good idea to invest in these funds if you don’t want to take a high risk and are satisfied with moderate returns. Moreover, first-time equity investors can start their investing journey with these market-linked instruments. It will help them get an insight into the capability of mutual funds.
Top 5 blue-chip funds
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Canara Robeco Blue-chip Equity Fund
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Axis Blue-chip Fund
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BNP Paribas Large Cap Fund
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Mirae Asset Large Cap Fund
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IDBI India Top 100 Equity Fund
Taxation on blue-chip funds
Blue-chip funds have the same tax liability as other equity assets. The earnings on funds you hold for less than a year are known as short-term capital gains and are liable to 15% tax.
The gains made on investments you hold for more than a year are classified as long-term capital gains. Tax is exempted on gains up to Rs. 1 lakh. The amount exceeding this limit is liable to taxes at 10% without indexation advantage.
Conclusion
Investing in the top blue-chip mutual funds ensures a stable and steady income even during a downturn. Use the Tata Capital Moneyfy App to get more information about the best blue-chip funds.
