What is the difference between Large cap and Blue-chip Funds?

You must have often come across fund names like RST Bluechip Fund or XYZ Large-cap Fund while looking for information on Mutual Funds , their performance, NAVs, and rankings. The fund name ‘Bluechip fund’ and ‘large-cap fund’ are used interchangeably because they both refer to those equity mutual funds that invest in stocks of large-cap companies listed on the stock exchanges. 

If you refer to SEBI’s product categorization circular issued in Oct 2017 that came into effect in June 2018, there is no mention of Blue chip funds under Equity Fund category. Does this mean we don’t have any Bluechip Funds now? No, it just means that whatever may be the nomenclature, as long as a fund invests in the top 100 listed companies by market capitalization, it will be categorized as a Large-cap Mutual Fund. 

There are many publicly listed companies on various exchanges in India. Large-cap refers to the top 100 publicly listed companies in India by full market capitalization (market capitalization = no. of publicly listed shares * price of each share). 

Bluechip stocks often refer to the stocks of the biggest companies of an economy that are publicly listed. Large-cap mutual funds invest 80% of their assets in such blue-chip stocks. Hence some AMCs choose to label their large-cap funds as Bluechip Mutual Funds. 

Next time you want to invest in a well-diversified equity fund with stable return potential, don’t get bogged down by their names. Look for the category they fall into and if they are classified as large cap funds, that’s where you need to carry out your next step of analysis and selection before finalizing a fund.