Choose quality over quantity with Bajaj Finserv Large Cap Fund

When it comes to investing, sometimes less is more. That's exactly the philosophy behind the Bajaj Finserv Large Cap Fund.

In a crowded market of large cap funds, Bajaj Finserv Large Cap Fund focuses on quality, not quantity, with a concentrated portfolio of 25-30* meticulously selected companies. This means that unlike funds that remain close to the index and spread themselves across many companies, the Bajaj Finserv Large Cap Fund is extremely selective of the companies it chooses to invest in. Why is it important? Let’s take a look at the two important ideas that set this fund apart: Active Share and Portfolio Concentration.

• Table of contents

1. Quality vs. quantity: Why quality matters
2. Portfolio concentration: Quality over quantity
3. Active share: Beating the index
4. What this table shows:
5. Active share calculation:
6. What active share means:
7. Key benefits of choosing Bajaj Finserv Large Cap Fund
8. How to invest in Bajaj Finserv Large Cap Fund?

Quality vs. quantity: Why quality matters

Here’s why quality stock selection can be beneficial:

Strong financials: Quality companies generally have strong financials, such as steady revenue growth, healthy profit margins, and low debt levels, providing a solid foundation for long-term growth potential and relative stability.

Competitive advantage: Quality companies often have sustainable competitive advantages, like strong brand value, innovative products, or market dominance, helping them maintain profitability even in economic downturns.

Effective management: Well-managed companies are led by experienced teams capable of making strategic decisions that foster long-term value.

Sustainable growth: Investing in high-quality companies can lead to relatively consistent and sustainable long-term growth potential

Risk mitigation: Quality companies are typically more resilient during market downturns, reducing downside risk.

Stock picking: Fund managers who focus on a select number of quality stocks actively research and select a concentrated portfolio of strong companies, potentially leading to benchmark beating returns over the long term.

Portfolio concentration: Quality over quantity

Portfolio concentration refers to the number of stocks held within a fund’s portfolio. Bajaj Finserv Large Cap Fund will typically hold between 25 to 30* stocks, based on the fund manager's high conviction in their potential to perform well. This means that our fund managers have a stronger belief on a few companies that have the potential to generate alpha. This also gives the fund a better chance to beat the index.

Active share: Beating the index

At Bajaj Finserv AMC, we believe, ‘You cannot beat the index if you buy the index.’ This means that if you simply invest in all the stocks that make up a broad market index, your returns will closely mirror the performance of that index. Then, how can you generate alpha?

To strive for relatively better returns than the index in long run, we emphasize the importance of having a high active share in a fund. Active share measures how different is a portfolio from the index.

A high active share indicates that a fund's holdings deviate significantly from the index. Let’s understand this with the help of an illustrative example. For simplification, we have considered only 5 stocks in a portfolio and index.

Stocks	Fund portfolio (%)	Index (%)	Difference (%)
Stock A	15	40	25
Stock B	20	10	10
Stock C	30	25	5
Stock D	35	5	30
Stock E	0	20	20
Total	100	100	90

What this table shows:

Portfolio (%): This tells us how much of the fund's money is invested in each stock.

Index (%): This shows the contribution of the stock to the value of the index.

Difference (%): This shows the difference between the index and the portfolio.

Active share calculation:

To find out how different the fund's choices are compared to the index, we add up all the differences: 25% (from Stock A) + 10% (from Stock B) + 05% (from Stock C) + 30% (from Stock D) + 20% (from Stock E) = 90%

• In our example, the total difference is 90%.
• We divide that by 2 to get 45%. That's our active share number.

What active share means:

The active share number (45% in this case) tells us that this fund's choices are about 45% different from what most other funds are doing that follow the index.

In essence, having a high active share means we are actively managing our portfolio to seek outperformance.

By intentionally focusing on a select group of stocks that have the potential to perform better than the overall market, the Bajaj Finserv Large Cap Fund seeks to deliver optimal long-term results for its investors in the long run. For a detailed scheme information, click here.

There are large cap funds, and then there is the Bajaj Finserv Large Cap Fund. There’s a difference.

Key benefits of choosing Bajaj Finserv Large Cap Fund

The Bajaj Finserv Large Cap Fund seeks long-term capital appreciation by primarily investing in large-cap companies. Here are some potential benefits of investing in this fund:

Exposure to established companies: The fund invests in well-established large-cap companies with a strong market presence and a strong track record.

High active share: The scheme seeks to maintain a portfolio that diverges from the benchmark index to potentially outperform it in the long term.

Concentrated portfolio: The portfolio will typically hold between 25 to 30* high conviction stocks. These are stocks of companies that the fund manager believes hold strong prospects for long-term growth.

Professional management: A team of experienced investment professionals selects and manages the portfolio, using their expertise to drive performance.

How to invest in Bajaj Finserv Large Cap Fund?

1. Choose your investment route:

Direct plan: Invest directly through the Bajaj Finserv AMC either on the website or through the nearest branch.

Regular plan: Invest through a registered mutual fund distributor.

2. Open an account:

Whether investing directly or via an online platform, you’ll need to open an account by submitting KYC (Know Your Customer) details and necessary documents.

3. Choose your investment option:

Lumpsum: Invest a larger, one-time amount.

Systematic Investment Plan (SIP): Invest a fixed sum regularly, such as monthly or quarterly. SIPs are effective for long-term investing, helping to mitigate market volatility.

4. Start investing:

Once your account is set up, begin investing in the Bajaj Finserv Large Cap Fund.

Conclusion:

The Bajaj Finserv Large Cap Fund provides investors with the opportunity to benefit from the growth of some of India’s largest and most established companies. With a high active share, the fund aims to provide benchmark-beating returns in the long term. Its concentrated portfolio comprises high conviction stocks. Investors seeking long-term growth potential and with a high risk appetite can consider investing in this fund.

FAQs

Why should I choose quality over quantity in large-cap investments?

Prioritising quality in large-cap investments can be beneficial. High-quality companies often show resilience during downturns, consistent growth, and reduced risk. Moreover, a focused portfolio with a high active share can help outperform the benchmark in the long run.

What are the benefits of investing in Bajaj Finserv Large Cap Fund?

Investing in Bajaj Finserv Large Cap Fund can offer potential benefits like relative stability through large-cap focus, consistent growth potential, experienced fund management and potential to deliver benchmark beating returns over time.

How does Bajaj Finserv Large Cap Fund differ from other large-cap funds?

The Bajaj Finserv Large Cap Fund stands out for its concentrated portfolio strategy, focusing on 25-30* high-conviction stocks. This active management approach seeks to generate alpha by prioritising quality over quantity in the large cap segment.

Is the Bajaj Finserv Large Cap Fund suitable for long-term investment?

The Bajaj Finserv Large Cap Fund may be suitable for long-term investors who can stomach some risk in return for better growth potential over time.

What is the investment strategy of Bajaj Finserv Large Cap Fund?

The Bajaj Finserv Large Cap Fund adopts a concentrated strategy, focusing on 25-30* high-conviction large-cap stocks. It emphasizes quality over quantity, selecting companies with strong fundamentals and growth potential. The fund's strategy relies on fundamental analysis and aims for relatively consistent long-term growth potential.

Who should consider investing in the Bajaj Finserv Large Cap Fund?

The Bajaj Finserv Large Cap Fund may be suitable for investors who have high-risk tolerance, a long investment horizon and seek the potential for benchmark-beating returns in the long term through active management and a concentrated portfolio with a high active share.

*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.