Sundaram MF Launches Bluechip Fund (NFO) – Should you invest?




Sundaram Blue Chip Fund NFO ReviewSundaram Mutual funds is coming up with blue chip fund that would open for subscription on September 17, 2020. As the name indicate, this would invest in blue chip stocks / large cap stocks. Large cap funds in simple terms referred as funds that invest in large cap stocks. Such funds provide stable returns in the medium to long term. In this article, we would provide Sundaram Bluechip Fund NFO issue details and whether one can invest in this fund or not.

Also Read: Principal MF launches Largecap Fund – Should you invest?

What are Large Cap / Blue Chip Mutual Funds?

As the name indicates, the large cap mutual fund invests in large cap stocks. A large cap company is generally defined as trustworthy, reputable and strong. These are generally well-established and has a strong track record. The blue-chip fund is another fancy name being used, though it invests large cap stocks.

Sundaram Blue Chip Fund NFO Issue Details

This is an open-ended equity fund. Here are the NFO issue details.

Scheme Opens 17-Sep-20
Scheme Closes 30-Sep-20
Scheme Plans Direct and  Regular
Growth and Dividend
Minimum investment (Lumpsump) Rs 100
Minimum investment (SIP) Rs 100 / 12 months
NAV of the fund Rs 10 during NFO period
Entry Load 0
Exit Load 1% redemption within 1 year
Risk Moderate High
Max Total expense Ratio (TER) 2.25%
Benchmark NIFTY 100 TRI

Download Sundaram Bluechip Fund NFO Prospectus. Latest details are yet to be uploaded into SEBI portal.

Who can invest in this NFO?

Any of the following can invest in this scheme.

1) Resident Individuals

2) Resident Indian Nationals, including partnership forms, companies, Banks, HUFs, Sole Proprietorship etc.,

3) NRI’s

4) Foreign Portfolio Investors

Who is the Fund Manager of Sundaram Bluechip Fund NFO?

Mr. Rahul Baijal, Mr.S Krishnakumar and Mr.Dwijendra Srivastava are the fund managers of Sundaram Bluechip Fund.

You may also read: Invesco new MF – Focused 20 Equity Fund – Should you subscribe?

What is the benchmark for this scheme?

The benchmark for this scheme is Nifty 100 TRI.

What is the investment objective of Sundaram Bluechip Fund?

The investment objective is to seek to generate capital appreciation by investing in large cap stocks.

However, there can be no assurance that the investment objective of the Scheme will be achieved.

What is the allocation pattern in this mutual fund?

This fund investment pattern is as follows:

1) It invests 80% to 100% in equity and equity related Instruments of large cap companies. The risk profile in this segment is high.

2) It invests 0% to 20% in equity and equity related Instruments of other than companies. The risk profile in this segment is high.

3) It would invest 0% to 20% in fixed income and money market instruments. The risk profile in this segment is low to medium.

4) It would invest 0% to 20% in overseas securities / ADRs / GDRs.

5) It would invest 0% to 10% in units of REITs / InvITs.

Can NRI invest in this MF scheme?

Yes, they can invest in this scheme. They can invest on repatriation or non repatriation basis.

Why should you invest in such bluechip funds?

Here are a few reasons to invest in such funds.

1) Blue chip funds invest in large cap stocks which are considered as more stable. Since such companies are large in size, these are comparatively safer companies compared to midcap or small cap stocks.

2) These blue chip funds are considered relatively safer as they invest in large cap stocks that are believed to be fundamentally strong. If there is a huge stock market crash, such large cap stocks would tend to recover faster during the recovery phase.

3) Bluechip stocks might pay dividend too. This could provide dividend yield to your portfolio though not guaranteed.

Some risk factors you should consider before investing in such funds

One should consider some of these risk factors / negative factors before investing.

1) This blue chip scheme majorly invests in large cap stocks that may provide stable returns. You can’t expect to be multi-baggers like we see in midcap or smallcap segment.

2) It would invest up to 20% in debt instruments. Debt instruments have become risk these days.

3) It invests up to 20% in overseas securities / ADRs which could be risky along with currency risk.

4) Investors should not assume any guaranteed returns from such funds.

5) Since it is a new mutual fund scheme, there is no past performance, hence we would not know, how the fund would perform in the future.

6) Read the scheme related documents carefully before investing in such schemes.

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How is the Performance of existing blue chip Funds?

Some of the mutual fund schemes have added fancy name “blue chip” to their fund name though they invest in large cap funds. Let’s use the same approach and filter some of the top performing blue chip mutual funds.

Fund Name 6 months Annualised Returns
1 Year 3 Years 5 Years
Axis Bluechip Fund -2% 7% 9% 12%
Canara Robeco Bluechip Equity Fund 4% 14% 8% 11%
ICICI Prudential Bluechip Fund 4% 3% 3% 9%
Kotak Bluechip Fund 3% 8% 4% 8%
SBI Bluechip Fund 2% 3% 2% 8%
Indiabulls Bluechip Fund -2% 1% 2% 8%
Franklin India Bluechip Fund 0% 0% -1% 5%

Should you invest in the Sundaram Bluechip Fund NFO?

This blue chip mutual fund scheme invests in large cap stocks. Blue chip / Large cap stocks provides stable returns to investors. As indicated earlier, don’t expect such stocks to be multi baggers. Large cap funds can provide 10% to 15% annualized returns if invested in medium to long term. If you want to test such funds, you can invest. Otherwise, you can invest in some of the best blue chip mutual fund schemes we recommended earlier.

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Suresh KP

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