Why Bajaj Finserv Large Cap Fund Looks Beyond the Index to Identify ‘Champions of Corporate India’

When investors think of large cap funds, they often think of familiar names, established brands, market leaders, businesses that have been around for years.

A large cap fund invests mainly in large cap companies, defined by SEBI as those ranked within the top 100 by market capitalisation on recognised stock exchanges. These companies tend to be widely researched, are leaders in their sectors, and often have high international and domestic institutional holding.

But not all large cap businesses offer the same investment case. Apart from market capitalisation, what also matters is fundamentals, scalability, sustainability and potential for long-term growth. 

This is where the Bajaj Finserv Large Cap Fund takes a different approach. The fund’s strategy is to hold a concentrated portfolio of select large cap stocks based on the fund manager’s conviction in their growth prospects. The investment belief is that “if you buy the index, you cannot beat the index”. So, rather than simply replicating the large cap universe, it uses it as a starting point to identify a focused set of businesses with strong fundamentals, scalability, sustainability and long-term growth potential.

What does looking beyond the index mean?

An index is a ready-made basket of companies that follows a fixed methodology. Companies enter, exit or receive weights based on pre-defined rules and the index’s purpose is to represent a particular segment of the market. This makes it useful for tracking performance and comparing portfolios.

However, an index does not assess companies through a forward-looking lens. It does not examine whether a company’s business is improving or check whether the stock is reasonably valued. It does not consider whether a sector has become more suitable in the current market environment – it merely selects eligible constituents based on their market capitalisation and other criteria.

This is the gap Bajaj Finserv Large Cap Fund seeks to address. A company’s inclusion in a portfolio is not only about it belongs to the large cap universe. There are several other factors to consider – Is this business likely to remain competitive? Does it have strong cash flows? Is the balance sheet strong? Can it manage volatility better than peers? Is the valuation reasonable for the growth potential?

So, while its benchmark, the Nifty 100 Total Return Index, remains the reference point, the portfolio is built through research, valuation assessment and the fund manager’s conviction.

Active share + concentrated portfolio

The fund expresses this active approach through three connected elements: a concentrated portfolio, high-conviction stock selection and high active share.

First, it aims to build a portfolio comprising just 25 to 30* stocks, aiming for an optimal risk-reward balance consistent with Modern Portfolio Theory principles. This allows the fund to avoid excessive dilution, while still maintaining a level of diversification to help manage stock-specific risk.

*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

Second, the concentrated structure gives greater room to high-conviction ideas – stocks that the fund manager believes offer a stronger investment case based on fundamentals, scalability, sustainability and long-term growth potential.

Third, this conviction is reflected through active share. Active share measures how much a fund’s portfolio differs from its benchmark, based on the weights of the stocks it holds. As of June 30, 2026, Bajaj Finserv Large Cap Fund had an active share of 43% and portfolio overlap of 57%, indicating a meaningful difference from the benchmark.

Together, these elements show how the fund’s view is translated into portfolio construction. The concentrated portfolio defines the structure, high-conviction stock selection drives the choice of companies, and active share shows the extent to which those choices differ from the benchmark.

Read also: Understanding benchmark index and its importance in mutual funds

Why this matters during volatile markets

Equity markets go through phases. There are periods when investors are confident and willing to take more risk. There are also times when uncertainty rises. Interest rates, crude oil prices, global developments, currency movements and earnings trends can all affect market sentiment. During such phases, business quality becomes important.

Companies with stronger balance sheets, stable cash flows, better access to capital and established management teams may be better placed to manage uncertainty. This is one reason large cap companies often come back into focus during volatile periods.

The fund’s approach is built around this idea: volatility can separate stronger businesses from weaker ones.

This does not mean large cap companies cannot fall. Equity markets carry risk. But the fund’s focus is on identifying large cap businesses that may be better placed to handle different market cycles.

This is where looking beyond the index becomes relevant once again. An index will hold companies based on its methodology. An active fund can decide which companies deserve higher weight, which ones need lower exposure and where the portfolio should be more selective.

What the risk and return data suggests

This approach has helped the fund show relative resilience amid the ongoing market volatility.  As of June 30, 2026, the scheme had a standard deviation of 13.1% compared with 13.7% for the benchmark. It also had a beta of 0.9 since inception*.  

Standard deviation gives an idea of how much returns have fluctuated. Beta shows how sensitive the fund has been compared with the benchmark. A beta below 1 means the fund has moved slightly less than the benchmark over the stated period.

These numbers are based on historical data and do not guarantee future outcomes, but they help investors understand how the fund has behaved so far.

At the same time, the fund has also managed to create alpha – outperformance versus the benchmark – since inception and in the past year. The fund’s returns as on May 31, 2026, are as follows:

*Risk Free Rate of Return for Beta calculation: 5.5% | Data as on 30^th June 2026; calculated since inception | Source: Internal Analysis, MFI360, Bloomberg | Past performance may or may not be sustained in future.

Conclusion

Large cap investing is often associated with established companies and relative stability. Bajaj Finserv Large Cap Fund takes this a step further by seeking to identify a select group of large cap businesses that may be well placed to grow and navigate changing market conditions over time. Its concentrated portfolio gives the fund manager greater room to express high-conviction ideas, while its high active share reflects how meaningfully the portfolio differs from the benchmark.

Ultimately, looking beyond the index is not simply about holding different stocks. It is about being selective about which businesses deserve a meaningful place in the portfolio. Through research, valuation assessment and focused portfolio construction, the fund seeks to identify companies that could sustain their position as the champions of corporate India over the long term. To read more about the scheme, check the Riskometer and other details and to invest, visit the Bajaj Finserv Large Cap Fund page.

Note: The data and information in this article are relevant as of the date of publication and may change subsequently. Please refer to the latest available information before making any financial or investment-related decision.

Returns as on June 30, 2026. Past performance may or may not be sustained in future. Different Plans i.e. Regular Plan and Direct Plan under the scheme have different expense structure. Benchmark: Nifty 100 Total Return Index (TRI)

Additional Benchmark: Nifty 50 TRI. Inception Date: 20th August 2024.

Period for which scheme’s performance has been provided is computed basis last day of the previous month preceding the date of this material. Returns greater than 1 year are compounded annualized.

Face Value per unit: Rs. 10.

The Fund Managers of the scheme: Mr. Nimesh Chandan (Equity Portion), Mr. Sorbh Gupta (Equity Portion) and Mr. Siddharth Chaudhary (Debt Portion). For the performance of other schemes managed by the Fund Managers which have completed 1 year or more than 1 year since inception, please visit https://www.bajajamc.com/downloads?factsheet and download the latest Factsheet or click here.

Mr. Nimesh Chandan manages equity portion of Bajaj Finserv Small Cap Fund. He also manages Bajaj Finserv Low Duration Fund.

Mr. Siddharth Chaudhary manages debt portion of Bajaj Finserv Small Cap Fund, Bajaj Finserv Equity Savings Fund and Bajaj Finserv Banking and Financial Services Fund. He also manages Bajaj Finserv Low Duration Fund.

Mr. Sorbh Gupta manages equity portion of Bajaj Finserv Small Cap Fund and Bajaj Finserv Equity Savings Fund.