The terms blue-chip stocks and blue-chip funds are frequently used in the context of investing and the stock market. A blue-chip stock is ideally associated with strong management and long-term performance rather than high returns.
These firms have stable businesses, a strong brand name, and a proven track record of delivering long-term, consistent returns. In the Indian context, blue chips include Tata Group, HDFC Bank, SBI, ICICI Bank, Reliance, Infosys, and ITC.
A blue-chip fund is a mutual fund that invests in blue-chip stocks.
Why should you invest in blue-chip funds?
· Due to the fact that these funds invest in blue-chip businesses that are closely monitored by analysts and fund managers, there is increased corporate governance and oversight.
· Blue chip stocks are extremely liquid in the market, so they can be bought and sold in large quantities, making them highly liquid even during times of high volatility.
· Blue chip stocks lower portfolio risk by adding stability, and they are less volatile than smaller and mid-sized enterprises.
· Blue-chip funds may not give as high of returns as mid- and small-cap funds, but they do provide more stable performance with less volatility. Such funds may not make a lot of money in a bull market, but they also don't lose a lot in a bear market.