The scheme sets itself apart through its focused strategy with a high active share and high-conviction stock selection. Read on to find out more about what large cap funds are, and what makes the Bajaj Finserv Large Cap Fund different.
What is a large cap fund
A large cap mutual fund invests a majority of its portfolio in the country's top countries in terms of market capitalisation. These are companies listed between 1 and 100 on the stock exchange. They are typically market leaders with strong fundamentals, a track record of relatively stable growth and a competitive edge. As a result, large cap funds are relatively less volatile than their mid- and small-cap counters, albeit with slightly lower return potential. This makes them suitable for investors seeking capital appreciation potential in the long term with relatively low volatility.
What is unique about Bajaj Finserv Large Cap Fund
To optimise growth potential, the Bajaj Finserv Large Cap Fund follows the quality over quantity approach, with a highly concentrated portfolio comprising 25-30 quality stocks*. These are stocks of companies that have been at the forefront of India's growth story, handpicked by the fund manager for their track record of relatively stable growth and economic resilience.
*The above investment strategy is based on prevailing market conditions and opportunities available at the time of investment. The Fund Manager reserves the right to change the count of stocks invested based on the SID and the opportunities available at the time of investment done, Position in derivatives will not be considered for the computation of total number of stocks in the portfolio.
Additionally, the portfolio will have a high active share, with the weightage of stocks in its portfolio diverging significantly from benchmark indices. This gives the fund the potential to offer benchmark-beating returns in the long run.
What is active share
Active share is a metric used to measure the percentage of a mutual funds holdings that differ from its benchmark index. A high active share indicates that the fund has a high degree of active management. This means that the fund manager plays a significant role in stock selection and portfolio management, as compared to a large cap fund that has an index-hugging portfolio (one that is similar in composition to its benchmark index, such as the Nifty50 or the Nifty100).
What are high-conviction stocks
High conviction stocks are those in which a fund manager or investor has strong belief and confidence. These stocks are typically chosen based on thorough research, analysis, and a deep understanding of the companys fundamentals, growth potential, and market position. These are some of the characteristics of high-conviction stocks:
Strong fundamentals: These are usually stocks of companies that have shown a track record of relative stable growth, robust earnings and a strong balance sheet. These are industry leaders that typically have a strong edge over their competitors and a track record of resilient growth. These also typically have shown resilience - the potential to show stable growth or mitigate losses during market ups and downs.
Long-term perspective: A high-conviction strategy usually has a long-term outlook, focusing on stocks that have the potential to generate good returns over time despite short-term market fluctuations.
Potential for outperformance: Due to the detailed research and careful stock selection, high-conviction stocks have the potential to outperform the broader market.
Benefits of large cap funds
Large cap funds offer several benefits to investors with their focus on top companies with strong track records. Some of these are:
Relative stability: Large cap companies are usually well-established with stable revenue streams and robust financial health. This typically translates to lower volatility, making large cap funds less risky than mid-cap or small-cap funds.
Potential for consistent returns: Large cap companies have historically provided positive returns over the long term (though past performance may or may not be sustained in the future). While their growth potential may not be as high as that of smaller companies, they have typically offered relatively stable growth with the potential for significant capital appreciation in the long term.
Liquidity: Large cap stocks are usually highly liquid because of their high trading volumes, meaning they can usually be easily bought or sold in the market. This liquidity means that investors can potentially enter or exit their positions without a significant price impact.
Resilience: Large cap companies often have the resources and market presence to withstand economic downturns better than smaller companies.
How to invest in Bajaj Finserv Large Cap Fund
You can invest in the fund starting July 29, 2024 when the NFO period starts. Units can be purchased at the face value of Rs 10 during this period. Once the NFO window closes on August 12th, 2024 the fund will reopen for subscription after a few working days. Units can then be purchased at the prevailing Net Asset Value.
You can invest in Bajaj Finserv Large Cap Fund through lumpsum or through regular instalments using a Systematic Investment Plan (SIP). To plan your SIP investments, you can take the help of a SIP calculator. This tool shows you your potential returns based on your SIP instalment amount and expected returns. However, the calculator only provides estimates and there is no guarantee that the projected returns will be achieved.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
This document should not be treated as endorsement of the views/opinions or as investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document is for information purpose only and should not be construed as a promise on minimum returns or safeguard of capital. This document alone is not sufficient and should not be used for the development or implementation of an investment strategy. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. This information is subject to change without any prior notice.
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