Blue Chip Fund: Meaning, Advantage, Process, & How to Invest

Blue chip companies are the titans in the stock market. These companies are popular and have a high market value. Investing in blue chip funds helps investors build a strong portfolio that deals against all the odds such as inflation.

Let us understand more about blue chip funds, their features, how it work, challenges, risks, and more in detail.

List of Blue Chip Funds to Invest in India 2025

Below are the details of Blue chip funds to invest in India 2025:

What Are Blue Chip Mutual Funds? 

Blue Chip Mutual Funds are highly popular stocks to invest in the stock market. Reliance, Hindustan Unilever, Tata, etc., are considered blue-chip companies.  Blue chip funds offer solid and stable yields for a long time to their investors. These blue chip mutual funds have low-risk factors, high-market companies with sound financial schemes, and good returns.

How Do Blue Chip Mutual Funds Work?

The top 100 market cap companies are most of the blue-chip funds. These blue chip companies have a strong financial track record with good returns. To diversify the portfolio, these funds can be invested in bonds and cash equivalents. These companies have long-term investment goals and have relatively higher costs.
  

How to Invest in Blue Chip Mutual Funds?

Follow the below steps to invest in Blue chip mutual funds:

• Step 1: Choose a fund by comparing factors like past performance, investment strategies, expense ratios, etc.
• Step 2: Check for fees such as expense ratio, etc.
• Step 3: Considered your investment goals.
• Step 4: Diversify your investment

Features of Blue Chip Mutual Funds

Here are the features of blue chip mutual funds:

• Steady returns: Blue chip companies are well-established and well-known and are considered safer to invest offering steady and guaranteed returns.
• Creditworthy: With no financial dues and high capital investment, blue chip companies are considered creditworthy for investment.
• Lower Risk: A strong and steady financial performance of the blue chip companies is considered as lower risk for investors.
• Taxation: Gains from blue chip mutual funds are taxed as per Section 80C of the Income Tax Act. Short-term gains are taxed at a rate of 15% and long-term gains are taxed at 10% exceeding ₹1 lakh.

Types of Blue Chip Mutual Funds 

Below are two types of Blue Chip Mutual Funds:

• Large-cap Mutual Funds: Large-cap mutual funds that are invested in large companies by market capitalization. These companies have stable financial growth with low risk.

• Index Funds: Index funds mirror the performance of the specific stock market index like Sensex or Nifty 50.

Advantages of Investing in Blue Chip Mutual Funds

Here are the advantages of investing in blue chip mutual funds:

•  Solid Portfolio

Investing in Bluechip companies with a strong track helps you create a solid portfolio. The blue-chip mutual funds provide stability, especially during unstable market situations.  

•  Long-term financial goal

Blue chip mutual funds help achieve your long-term financial goals.

• Beat Inflation

Investing in blue-chip companies offers you a competitive edge over other companies due to their size. This helps in dominating the market helping you achieve long-term gains and beat inflation

Who Should Invest in Blue Chip Mutual Funds?

You can consider investing in blue chip mutual funds if you are looking for below benefits:

• Long-term investing: If you are looking for long-term investing options with lower risk blue chip mutual fund is considered a good investment option.
• Steady returns: Blue chip mutual funds offer steady returns as they have a proven track record of stable performance.
• Established and well-known companies: Blue chip companies have a strong market presence with high-quality services or products.
• New investors: If you are new investor, investing in a blue chip mutual fund can help you diversify your portfolio with a diverse range of companies across different sectors.

Factors to Consider Before Investing in Blue Chip Funds 

Below are the factors to consider before investing in blue chip funds:

• Company's Financial Stability: You must ensure the company has a strong financial and solid track record.
• Market Conditions: One of the major factors is market trends and market conditions you must assess before investing in blue chip funds.
• Diversification: Before investing in blue chip mutual funds, you must ensure you have a diversified portfolio. A well-diversified portfolio helps in reducing financial risk.
• Risk Tolerance: You must invest in blue chip mutual fund according to your risk appetite.

Taxation on Blue Chip Mutual Funds

Blue chip mutual funds can be taxed in two ways:

• Short-term capital gains: Selling your investments within one year will fall under short-term capital gains which are taxed at 15% + GST.
•  Long-term capital gains: Selling your investments after one year will fall under long-term capital gains which are taxed at 10% + GST (without any indexation benefits).

Conclusion

While you invest in blue chip mutual funds, you must consider all the factors associated with it. Also, you must invest according to your investment goals and risk appetite. Remember, Bluechip funds are a long-term investment with lower risk. To invest in blue chip mutual funds, you can opt for the BlinkX App.