Bajaj Finserv Large Cap Fund open for subscription: All you need to know

Bajaj Finserv Asset Management Ltd. on July 29th, 2024, launched its latest mutual fund scheme, the Bajaj Finserv Large Cap Fund. This is an open-ended equity mutual fund scheme investing predominantly in large cap companies. The New Fund Offer period – when the scheme is opened to investors for the first time – is on till August 12. Investors can buy units at the face value of Rs. 10 during this period.

The Bajaj Finserv Large Cap Fund follows a concentrated strategy, with a portfolio of 25-30* carefully selected stocks of companies that are Champions of Corporate India.

What is a large cap fund?

A large-cap fund is a type of mutual fund that invests primarily in the country’s largest companies in terms of market capitalisation. These are companies that are ranked between 1 and 100 by market cap on the stock exchanges. Large-cap companies are typically well-established and relatively financially stable, with healthy balance sheets and strong fundamentals. As a result, large cap funds are typically considered less risky than small cap or mid cap funds, as they are less sensitive to market movements and are relatively less volatile than stocks of smaller companies.

This makes large cap funds suitable for investors seeking long-term growth potential with relatively low volatility.

What makes the Bajaj Finserv Large Cap Fund different?

The Bajaj Finserv Large Cap Fund sets itself apart from other players in the field with its concentrated strategy that focuses on companies that have been at the forefront of India’s growth story and show positive future prospects. Fund managers will meticulously select 25-30* stocks for its portfolio. Through such high-conviction stock selection and high active share, the fund will seek to potentially deliver benchmark-beating returns in the long term.

Key features of Bajaj Finserv Large Cap Fund:

High-conviction stock selection: High-conviction stocks are those in which a fund manager or investor has strong confidence and belief. These stocks are selected based on thorough research, analysis, and an in-depth understanding of the company's fundamentals, growth prospects, and market position. The concentrated portfolio of the Bajaj Finserv Large Cap Fund will focus on companies with a consistent track record of stable growth, robust earnings, and strong balance sheets. They are industry leaders with a competitive edge that can display a greater degree of resilience during market fluctuations. The stock-selection will have a long-term view, focusing on stocks expected to deliver strong returns in the long-term. With this meticulous research and careful selection, a portfolio consisting of high-conviction stocks aims to potentially outperform the broader market.

High active share: Along with its concentrated strategy, the portfolio will also have a high active share. Active share is a measure that indicates the extent to which a mutual fund's holdings differ from its benchmark index. A high active share suggests greater deviation from the benchmark index – which means that the weightage of the stocks in the portfolio diverge significantly from the benchmark index. This indicates a high level of active management, meaning that the fund manager is deeply involved in selecting stocks and managing the portfolio. This is in contrast to that closely mimic their benchmark indices, such as the Nifty100.

Why is this a good time to invest large cap stocks?

As one of the fastest-growing economies in the world, India is poised to advance rapidly on the global stage. This gives large cap investments a  potential outlook in coming years, as they have a larger scope for global expansion than blue-chip giants of developed countries such.

The growth rate of large cap stocks has also been robust and has picked up pace in recent years (returns are not guaranteed and past performance may or may not be sustained in the future). Moreover, during downturns, they have fallen less than small and mid cap stocks and have also recovered their losses much faster. Lastly, large cap funds are currently trading at close to their fair valuation, indicating that they are in an attractive position for long-term investments.

Advantages of large cap fund

Here are some reasons why large cap funds can be an attractive investment avenue:

Relative stability: The investment universe of large cap funds comprises well-established companies that are among the country’s biggest in terms of market capitalisation. These companies tend to be more stable and less susceptible to market volatility, making them less risky than small cap or mid cap funds.

Potential for relatively consistent returns: Large-cap companies typically have a long history of strong performance and profitability. Though their growth potential is not as high as that of small and mid cap stocks, they offer the potential for significant long-term growth.

Dividend payouts: Many large-cap companies have a track record of paying regular dividends. This can help investors seeking an income stream from their funds. Moreover, these dividends, when reinvested, can optimise the fund’s growth potential.

Liquidity: Due to their high trading volumes, large-cap stocks are usually highly liquid, meaning they can be easily bought and sold in the market.

How to invest in Bajaj Finserv Large Cap Fund

During the NFO period (July 29, 2024, to August 12, 2024), you can buy units at the face value of Rs 10. When the fund reopens for subscription, units can be purchased at the applicable Net Asset Value when the purchase request is placed.

The minimum investment amount for both lumpsum and SIP (Systematic Investment Plan) is Rs 500.

You can invest online on www.bajajamc.com by clicking on ‘Invest Now’ on the Bajaj Finserv Large Cap Fund scheme page. You can also click the login/register tab at the top of the home page. You can also invest online or offline through Bajaj Finserv AMC, distributors and aggregator platforms.

NFO details of Bajaj Finserv Large Cap Fund

· NFO period: July 29 – August 12, 2024

· Category of scheme: Large Cap Fund

· Type of scheme: An open ended equity scheme predominantly investing in large cap stocks

· Benchmark index: Nifty 100 Total Return Index (TRI)

· Opening NAV: Offer for units of Rs. 10 each for cash during the NFO and continuous offer for Units at NAV based prices

· Minimum Application Amount:
During NFO:
Lumpsum: Rs. 500/- and in multiples of Re. 1/- thereafter.
Systematic Investment Plan (SIP): Rs. 500 and above: minimum 6 instalments.

*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.

Moneycontrol Journalists are not involved in creation of this article.