By Ashish Kyal –
Equity investments are always profitable but most of the investor has a tendency that it is risky to invest in equity looking a the volatility of the market. This type of investor always prefers to invest in Blue chip companies. Investment in Blue chip companies is comparatively less risky as they have their existence in other countries rather than their birth nation.
Same goes with Mutual funds, where equity funds are risk taking funds, Blue chips are meant to be equity but less volatile. A Blue chip fund invests in stocks of well established companies with a strong financial track in the past. Along with this companies have a steady payout of dividend and profitability over the year.
Blue chip fund can operate profitably or in the least better than average, in the face of adverse market conditions. This contributes to their track record of growth and stability. Simply put, blue chips make for ‘reliable’ investment. For this reason, blue chip funds are usually less volatile as compared to other equity funds.
From a broader view, returns gained on Blue chip fund are expected to be in a same range. As the risk associated with this stock are to less, on the other hand it has a decent returns.
SBI Blue Chip Fund- Growth Weekly Chart
SBI Blue Chip Fund is classified as Large Cap Fund Ranked 1 by Crisil. This fund has 84.43% exposure to Equity followed by some exposure to Money market Instruments.
Portfolio Analysis: The fund is well diversified in terms of stocks as well as at Sector level with flexibility of investing up to 20 per cent in mid-cap stocks. The fund is benchmarked to BSE 100 index. The Top holdings and Sector allocation for the stocks are shown below.
The fund has also outperformed its benchmark across market phases, but due to its maximum exposure to Equity instruments this fund is considered risky. However the investment is into blue chip companies which give a cushion to the risk associated with the equity markets.
Investment Rationale: SBI Blue Chip Fund has maximum exposure to Equity but the benefit is that it’s a large cap fund so the correction should not be much deeper like the small cap stocks. In order to fetch alpha returns the investors should make staggered investments and SIP will be the best option as of now!
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