Bajaj Finserv Large Cap Fund: Why this could be a good time to invest in large caps

In a stock market marked by volatility, large cap funds have historically been relatively stable investment avenues with long-term growth potential. While they typically offer lesser capital appreciation potential than small and mid-cap stocks, current market conditions suggest that large cap stocks potentially offer a favourable outlook for long-term investing, driven by India’s rapid economic growth.

• Table of contents

1. What are large cap funds?
2. Key characteristics of large cap funds
3. Current market conditions and opportunities
4. Bajaj Finserv Large Cap Fund: Unique features
5. How to invest in Bajaj Finserv Large Cap Fund
    

The Bajaj Finserv Large Cap Fund looks to tap into this investment environment. The fund follows a concentrated investment strategy, focusing on 25-30* high-conviction stocks, and seeks to maintain a high active share. This article explores the features of the Bajaj Finserv Large Cap Fund and why it may be a suitable time to invest in this category.

What are large cap funds?

Large cap funds focus on the country’s biggest companies -- those ranked from 1 to 100 on the stock exchange in terms of market capitalisation. Large cap companies are typically industry leaders with strong fundamentals and healthy balance sheets. As a result, large cap stocks tend to be more resilient to market volatility than small and mid cap stocks.

Key characteristics of large cap funds

• Relative stability: Large cap companies are usually well-established, industry-leading firms with a track record of good performance.
• Liquidity: These stocks are highly liquid, with high trading volumes.
• Lower volatility: They tend to be less impacted by volatility than mid and small cap stocks, making them more resilient during downturns.

Current market conditions and opportunities

The present market scenario offers several attractive opportunities for large cap stocks in India, especially from the long-term investment perspective. Here are some reasons why:

1. Large cap stocks are nearing fair valuation: According to a study by Bajaj Finserv Asset Management Ltd, large cap stocks have been trading near their fair valuation. This presents a good entry point for investors, as fair valuation indicates that stock prices are in line with the intrinsic value of the underlying companies. Over-valued stocks are those whose current market price is inflated when compared to their fundamentals. This means that a price correction in the near future could cause prices of overvalued stocks to fall.
2. Lower volatility and faster recovery: The study by Bajaj Finserv AMC also showed that large cap stocks have historically displayed greater resilience during market downturns. They have typically experienced less significant declines and recovered faster than mid and small cap stocks. They have also performed better than small and mid cap stocks in narrow or flat market. (Past performance may or may not be sustained in the future).
3. India’s economic growth: India’s rapidly growing economy offers ample opportunities for large cap companies, especially market leaders that form the backbone of the economy. Unlike the more mature large cap giants in developed markets, Indian large cap companies have considerable room for growth on the global stage. As India’s economy evolves, these companies are well-placed to potentially capture new market opportunities and deliver long-term growth potential to investors.

Read also: Benefits of Investing in Large-Cap Funds

Bajaj Finserv Large Cap Fund: Unique features

Here are some features that differentiate the Bajaj Finserv Large Cap Fund from its competitors:

• Concentrated strategy: The Bajaj Finserv Large Cap Fund follows a concentrated strategy, which means it focuses on a select portfolio of 25-30 stocks* that they believe have significant potential for long-term growth. Fund managers closely monitor each investment and make informed decisions based on in-depth analysis.
• High active share: The fund seeks to maintain a high active share, meaning that its portfolio's composition differs significantly from the benchmark index. A high active share signals a great degree of active management. Fund managers strive to build a portfolio that doesn’t simply track the index and instead allocates resources to those avenues that they believe can potentially outperform the benchmark in the long run.
• High-conviction stocks: The fund’s portfolio consists of high-conviction stocks – those whose long-term growth prospects the fund manager is optimistic about. These are selected based on rigorous research and a strong understanding of the company’s fundamentals. These are companies that exhibit strong financial health, market leadership, and the potential to deliver superior returns over the long run.
• Long-term view: The Bajaj Finserv Large Cap Fund seeks to offer benchmark-beating returns in the long term and is suitable for investors who have an investment horizon of several years.

How to invest in Bajaj Finserv Large Cap Fund

You can invest in the Bajaj Finserv Cap Fund either online or offline. To invest online through Bajaj Finserv AMC, you can follow these steps:

1. Click on the login/register tab on the home page of www.bajajamc.com or visit the Bajaj Finserv Large Cap Fund page and click on ‘Invest Now’. Both these options will take you to the investor portal.
2. Existing investors can log in with their PAN details. Else, sign up through a quick process by providing some basic information such as your name, identity proof and bank account details.
3. Select the scheme, select your investment amount and mode of investment (Systematic Investment Plan or lumpsum).

Alternatively, you can invest through your registered mutual fund distributor, through online aggregator platforms or through KFintech, our Registrar and Transfer Agent.

FAQs

Why is this a suitable time for investing in Bajaj Finserv Large Cap Fund?

Large cap stocks are trading near their fair valuation, providing an attractive entry point for long-term investors. Additionally, with India poised for significant economic growth, large cap companies are well-positioned to capture long-term growth potential and access global growth opportunities.

What are the unique features of the Bajaj Finserv Large Cap Fund?

The Bajaj Finserv Large Cap Fund distinguishes itself through its concentrated investment strategy and high active share. By focusing on 25-30* high-conviction stocks, the fund aims to outperform the benchmark in the long term.

How does a high active share benefit the fund?

Active share indicates the degree of divergence between a fund’s portfolio and that of its benchmark index. The higher the active share, the greater the variance. A high active share indicates a greater degree of active management as the fund managers has more flexibility take advantage of market opportunities and potentially benchmark-beating returns in the long term.

*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.

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.