One of the popular types of mutual funds to invest your money is a blue chip mutual fund. Out of all the blue-chip mutual funds, the SBI blue-chip fund stands out for various reasons such as track record, management, and performance. In this article, we will cover everything you need to know about the SBI Blue Chip Fund.

5 Things to Know Before Investing in SBI Blue Chip Funds

Bluechip mutual funds invest specifically in large, established companies with a stable performance history. In comparison with other equity funds, Bluechip funds are considered less risky.

Here are five important factors about the SBI Blue Chip Fund that you need to know before making an investment decision.

1. Risk Factors

    All equity funds carry certain risks, including the SBI Blue Chip Fund. The fund’s main concentration is on large-cap stocks, that typically respond to fluctuations in the market, and therefore are not free of risk fully.

    However, the risk is managed by the diversification of this fund and the quality and stability of companies where the fund’s capital is invested. The SBI Blue Chip Fund works towards stability with the potential of equity market risk.

    2. Investment Horizon and Goals

      SBI Blue Chip Fund is for investors with long-term plans like retirement, children’s education, or savings. Due to the nature of this fund, it has a stable growth trajectory, which is likely to be seen over an extended period.

      Large-cap stocks within the fund will help steady long-term returns and lower short-term volatility compared to mid/small-cap funds.

      3. Costs and Fees

        It is always important to know the costs. SBI Blue Chip Fund has a Total Expense Ratio of sound 1.51%, which represents the fund house’s fee for managing the fund, along with other overhead expenses.

        These fees have a direct impact on returns. It is recommended that investors compare expense ratios with other blue-chip mutual funds to get the best deal.

        4. Tax Implications

          Investing in the SBI Blue Chip Fund has tax implications. The gains in this fund are subject to capital gains tax. In short-term capital gains, if you sell your units within one year, they are taxed at 20%. In long-term capital gains, if you sell your units after one year, they are taxed at 12.50% on amounts exceeding ₹1.25 lakh.

          The dividends you receive from the fund are taxable as per your applicable tax slab. Knowing these tax implications can help you plan your investments and withdrawals more effectively to minimize your tax outflow.

          5. Performance Consistency

            A highlight of the SBI Blue Chip Fund is that its performance has been consistent for a while now. It has a history of delivering stable returns through different market cycles. The funds stick to high-quality large-cap companies with strong fundamentals, which have been working for the long term. In the last 5 and 10 years, this fund has given returns of 18.77% and 14.41%.

            You should review the fund’s past performances before investing. You should know how the fund has performed relative to the benchmark and peers. It gives you another insight into considering the fund as an investment option.

            Conclusion

            Investing in the SBI Blue Chip Fund has various benefits. These include stability, potential for long-term growth, and professional management. However, it is advisable to look at risk, investment duration, charges, taxes, and past performance of the investment. Exploring these facets helps investors make an informed decision.