Indiabulls Bluechip Fund: One of the top performing Large Cap Funds

2017 was a great year for stock markets in India with the Nifty rising by nearly 2,470 points (a rise of nearly 29%). Mutual fund investors enjoyed fantastic returns, especially in the small and midcap funds category in 2017 – fund category return of over 36%. This terrific rally has also brought concerns with regards to valuations. Sumit Bhatnagar, fund manager in Indiabulls Asset Management Company, feels that investors need to “tone down their return expectations”

In our blog posts, Are midcap valuations a cause of concern for mid cap mutual funds – Part 1 and Part 2, we discussed that valuations of many midcap stocks are very high and many midcap stocks are trading at a huge premium to large cap stocks. If there is a sharp correction in the market in the near term then, small and midcap stocks are likely to be affected the most due to stretched valuations. From a risk reward trade-off perspective, large cap stocks and funds are the best place to be in such a scenario. Many mutual fund advisors are also recommending large cap funds to investors. In this blog post, we will discuss the performance and outlook of Indiabulls Bluechip Fund, a large cap oriented equity mutual fund scheme.

What is a Bluechip Fund?

Let us first discuss, what we mean by a bluechip stock. Companies which have a market capitalization exceeding Rs 10,000 Crores are usually known as large cap companies. As per the market regulator SEBI, the 100 largest companies by market capitalization in India will come under the large cap segment. These are well known companies with a fairly long history. These companies command a high percentage of the market share in their respective industry sectors. The largest of large cap companies are known as bluechip companies (stocks). They are called bluechip companies because they enjoy the public’s confidence due to their strong long term track record. In India the companies which form part of the BSE - Sensex of CNX – Nifty index are usually considered bluechip companies. Given their large size, investors believe that these companies are better placed to survive downturns in the economy compared to smaller companies; as a result these companies are perceived to be less risky and investors are ready to pay a premium for their shares. A mutual fund scheme which invests primarily in bluechip stocks is named a bluechip fund.

Indiabulls Blue Chip Fund – Overview

Indiabulls Blue Chip Fund was launched in February 2012. The scheme has Rs 413 Crores of Assets under Management (AUM). The expense ratio of the fund is 2.62%. The fund has given 13.3% compounded annual returns since inception. The fund is managed by Sumit Bhatnagar. Mr. Bhatnagar is an MBA (Investment Management) from University of Toronto, Canada and CFA Charter (USA). Prior to joining Indiabulls Mutual Fund he has worked with SEBI. The scheme benchmark is CNX – Nifty.