Bajaj Finserv Mutual Fund has unveiled its new equity fund, Bajaj Finserv Large and Midcap Fund, on February 6, 2024. The fund, open for subscription until February 20, 2024, is the second active equity fund offered by Bajaj Finserv Asset Management Company (AMC) after their flexicap fund. Aligned with SEBI's mandate, it will invest in both large-cap and midcap stocks. Stay tuned for our review of the NFO.
Why Consider Large and Midcap Funds?
Investors often turn to large and midcap funds for several reasons. Winners frequently rotate across market cap segments, as depicted in the chart below. By maintaining a diversified portfolio comprising both large-cap and midcap stocks, investors can potentially achieve superior long-term returns while mitigating risks during market volatility.
The Bajaj Finserv Large and Midcap Fund will adhere to a moat investing strategy, emphasizing quality within the framework of its INQUBE philosophy. This approach aims to generate robust performance for investors.
Large cap indices like Nifty 100 often exhibit a heavier focus on sectors such as BFSI, IT, Oil and Gas, and FMCG. However, large and midcap funds offer exposure to sectors where large caps are less represented, such as textiles, media, and entertainment. Additionally, large and midcaps provide more balanced exposure to sectors like Capital Goods, Consumer Services, Realty, and Chemicals, which may benefit from India's consumption-driven economic growth, rising per capita income, and evolving global supply chain dynamics (e.g., China+1 strategy). Government initiatives like import substitution (Make in India), digitization, infrastructure spending, and the shift from unorganized to organized sectors further enhance the potential of these sectors.
Large caps typically provide a better risk-return trade-off compared to broader market indices like Nifty 50 and Nifty 500, as illustrated in the charts below. Over several years, Nifty Large and Midcap 250 TRI have shown higher returns than Nifty 50 and Nifty 500, with comparable or lower levels of volatility (standard deviation) in most instances.
Is Now the Right Time to Invest in Large & Midcaps?
Despite the rally in equity markets, valuations of stocks across various market segments have surged. However, the large and midcap index still trades at relatively fair valuations compared to historical averages. These current valuations may present appealing investment opportunities for long-term investors.
Quality Large and Midcap Stocks for Superior Returns
Quality large and midcap stocks have demonstrated the ability to generate superior risk-adjusted returns. Over the last decade, Nifty Quality 200 Quality 30 TRI outperformed Nifty 500 TRI in more than 50% of instances, across various market conditions. This underscores the potential for quality-focused investing strategies to deliver favorable outcomes for investors.
Furthermore, the standard deviations (volatility) of Nifty Quality 200 Quality 30 TRI consistently remained lower than those of Nifty 500 TRI. This indicates that quality investing not only generates superior returns but also offers reduced volatility, affirming its capacity to deliver superior risk-adjusted returns.
About Bajaj Finserv Large and Midcap Fund
The scheme will invest in 40 – 60 large and midcap stocks with wide economic moat advantage. Economic moat refers to a powerful and enduring competitive advantage with the following benefits:-
Stability amid fluctuations
Quality over size
Stock Selection Process
Bajaj Finserv Investment Philosophy – INQUBE
Why invest in Bajaj Finserv Large and Midcap Fund
Who should invest in Bajaj Finserv Large and Midcap Fund?
Investors looking for capital appreciation and wealth creation.
Investors having a 5 year plus investment horizon in this scheme.
This fund can be suitable for new or first time investors
Investors with very high risk appetite.
Investors can invest in this scheme either through lump sum or SIP depending on your investment needs.
Investors should consult with their financial advisors or mutual fund distributors if Bajaj Finserv Large and Midcap Fund will be suitable for their investment needs.
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*Investors should consult their financial advisors if in doubt about whether the product is suitable for them Note: The above information has been sourced from the Scheme Information Document provided by Bajaj Finserv Asset Management. Read the entire document before investing, Disclaimer: Jaiprakash (ARN/Distributor - 70524; brand name Vasundhra Investment) is the distributor of the mutual fund. Please consult your investment advisor before investing
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.