DIVE IN TO BLUECHIPS FOR YOUR MUTUAL FUND INVESTMENTS
The term blue chip comes from the game of poker where the blue chip holds the highest value. Here it refers to the shares of the company that are thought to be significantly safer than a vast majority of stocks. They carry excessive financial strength enormous cash reserves, little or no debt and have the capability to survive any financial depression. Wealthy and successful investors tend to love these blue chips because the stability and strength of their financial statement means that the passive income is hardly ever in danger, especially if there is broad diversification in portfolio.
Blue chip funds are considered low risky since the underlying securities are well established, stable companies and with a history of paying dividends and maintaining value despite fluctuations in the surrounding market. They can also be chosen as a part of conservative investment strategy.
SBI Blue Chip Fund- Growth Weekly Chart
SBI Blue Chip Fundis classified as Large Cap Fund Ranked 1 by Crisil. This fund has 85.53% 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.
Top holdings –
Returns as on 06 July, 2016
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 Fundhas 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!