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What is the Difference Between Large Cap Funds and Blue Chip Funds?

When you delve into the mutual fund spectrum, there is just so much you need to learn. While there are new terminologies to get the…

When you delve into the mutual fund spectrum, there is just so much you need to learn. While there are new terminologies to get the hang of, how could you forget the part where you need to know the difference between one mutual fund and another (since there are so many)? In this post, we are going to show you the difference between large-cap mutual funds and blue-chip mutual funds.

What is a Large Cap Fund?

A large-cap mutual fund is a fund or even an ETF that primarily invests in stocks of large-capitalization companies (typically those with a market capitalization of Rs. 100 crores or more). These companies are well-established, full-fledged, and have already entered their growth stage.

If you look at it more in-depth, large-cap companies offer you the benefit of stability since they are out of the growth phase and already into the maturity phase. They already have a prominent spot in the market, which means they are the least likely to be volatile.

Large-cap funds are accessible through any asset management company or mutual fund house. One great example is Groww Large Cap Fund.

How Does a Large Cap Fund Work?

Large-cap mutual funds are a suitable choice for any investor who is not looking forward to risks. Now, don’t go away trying to find the best large-cap fund around you – we still have a lot to say.

Though we say it has the least risk, it is not risk-free. All mutual funds, whether large cap or small cap, have a certain form of risk – since they are linked to the market. The essential aspect you need to know is how much risk each kind of mutual fund carries. When it comes to large-cap funds, they do not have a lot of risks. However, you can only expect stable returns from this fund.

What is a Blue Chip Fund?

A Blue Chip Fund is a form of mutual fund or even ETF that primarily invests in Blue Chip Stocks. Blue Chip Stocks are the shares of large, financially sound, and well-established companies. These companies usually have a record of reliable performance in history and are often leaders in their respective industries. They also have a strong presence, pay regular dividends, and have stable earnings.

How Does a Blue Chip Fund Work?

A blue-chip mutual fund operates by pooling money from different investors to invest in a spread-out portfolio of blue-chip stocks. These stocks, as previously mentioned, are shares of some high-performance and established companies. These market leaders are the underlying assets of blue-chip mutual funds.

These funds can be structured either as mutual funds or as ETFs. They could be actively managed or even passively. They would be a preferable choice for investors who are looking forward to staying safe in their mutual fund investments. Though it might hold some risks, it is not entirely risky.

Difference Between Large Cap Funds and Blue Chip Funds

How are the two kinds of mutual funds different? Read to find out!


Large Cap Funds vs Blue Chip Funds


Large Cap Mutual Funds Blue Chip Mutual Fund
Large-cap mutual funds or ETFs would invest in large-cap companies (the shares of large-cap companies), and these large-cap companies would have a market capitalization of more than Rs. 100 crore. Blue Chip funds invest in blue chip stocks. These are the shares of well-established and financially sound companies. These companies are known for their reliability, performance, strength, and regular dividend quality.
Major Features ●      This fund invests in companies with large market capitalization and companies that are already in their maturity phase.

●      They aim at capital appreciation and a regular source of income through continuous dividends from the stocks.

●      They offer diversification through investments in different sectors and industries that have a large cap segment.

●      It could be actively managed or passively managed, based on several terms.

●      It usually has lower risk than a small or mid-cap fund and offers moderate returns.

●      These funds primarily focus on investing in the most sound companies, which also include large caps.

●      They could either be actively or passively managed.

●      These funds look forward to capital appreciation and a regular source of income in the form of dividends. They also prioritize stability and reliability.

●      These funds provide diversification through investments in different sectors and concentrate on the best-quality, leading companies within those sectors.

●      These funds usually have lower risk, steady and moderate returns, and regular dividends.

This could be a head-scratcher. Well, there is only one basic rule to explain the difference between the two funds.

The Large-cap funds invest in the shares of large capitals only. Blue chip funds invest in top-rated companies, which would also include large-cap funds.


It might seem confusing when you look at large-cap mutual funds and blue-chip mutual funds. Both of them might have similar qualities, and by now, you know that they are not the same. This will help you make better decisions when you plan on investing in different kinds of mutual funds, especially when you come across two very similar funds.



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