Bajaj Finserv Large Cap Fund

The Bajaj Finserv Large Cap Fund

Even though the Indian equity market is consistently brimming with an opportunity to grow your wealth, navigating them effectively requires some level of expertise. Mutual Funds allow investors who do not have the time or inclination to research the market to participate in such investments professionally, with the help of experts. The Bajaj Finserv Large Cap Fund is available for subscription under New Fund Offering from July 29th 2024 to August 12th 2024. It offers a unique approach that capitalises on the power of “economic moats.” Let’s delve into what this fund offers and see if it aligns with your investment goals!

What is the Bajaj Finserv Large Cap Fund 

The Bajaj Finserv Large Cap Fund has a concentrated strategy overseen by Nimesh Chandan as the CIO. It is a unique large cap fund which aims at investing in 25-30 stocks to provide risk-adjusted returns over the long term. 

Why choose the Bajaj Finserv Large Cap Fund?

This mutual Fund is rather different due to numerous reasons unique to its investment philosophy. 

• Utilising Economic Moats: Since the fund actively seeks companies with strong “moats”.  An Economic moat refers to the ability of a business to maintain a competitive edge over other companies to maintain its market share. An economic moat can range from a powerful brand name to the possession of a newer technological innovation. By prioritising companies with these moats, the fund aims to generate long-term capital appreciation for investors. 

A moat can help a business book profits and maintain the market share due to the following reasons:-

1. Cost Advantages: A company with a cost advantage stands a chance to produce each unit at a lower cost as compared to its competitors. This way, it can book higher profits. 
2. Size advantage: Larger companies tend to dominate the industry since they occupy a larger share of the market. Due to economies of scale they reduce other overhead expenses and book higher profits by saving money on activities like marketing and advertising. 
3. Intangibles: A firm’s intangible assets can include patents, brand recognition, government licences etc. These intangibles allow firms to charge a higher rate of premium for their services and products, booking larger profits. 

From an investor’s view, it is ideal to invest in a growing company when they begin to reap the benefits of an economic moat. The benefits for the shareholder lie in the longevity of the company’s ability to book such profits. 

• InQuBe: Powering Informed Decisions

Backing their investment strategy is Bajaj Finserv’s proprietary InQuBe philosophy. This framework integrates information edge, quantitative edge and behavioural edge to help select the right funds and choose right weightage of investments to build a strongly selected, well constructed portfolio.

Key Details of the Bajaj Finserv Large Cap Fund 

• Asset Management Company: Bajaj Finserv Asset Management ltd.
• Fund Manager: Mr. Nimesh Chandan: Chief Investment Officer, Mr. Sorbh Gupta: Senior Fund Manager – Equity, Mr. Siddharth Chaudhary: Senior Fund Manager – Fixed Income
• Category of Scheme: Large Cap Fund
• Risk Profile: Very High
• NFO Start Date: 29th July
• NFO End Date: 12th August
• Exit Load: If up to 10% of units allotted are redeemed/switched out – Nil any redemption/switch-out of units in excess of 10% of units allotted – 1% of applicable NAV. If units are redeemed/switched out after 6 months from the date of allotment, no exit load is payable

Why Large Cap Funds?

Large Cap companies are companies with a market capitalization of more than 80,000 crores. These are usually well known names and are dominant in their respective fields. These are the advantages to investing in large cap companies:

• Stability: Usually, these large companies are financially stable and have a consistent growth and earning. Since they are not prone to drastic market fluctuations due to their size, such funds ensure portfolio stability. 
• Lower Volatility: Large Ccp holdings are typically less volatile than small cap funds. Due to this, during times of market lows, Large cap holding values fall lesser than small cap holdings. 
• High Liquidity: These stocks provide a higher liquidity. Therefore, in times of need you can liquidate funds without incurring losses. 

Investment Philosophy & Key Features of the Bajaj Finserv Large Cap Fund

The core objective of the Bajaj Finserv Large Cap Fund is to generate long-term capital appreciation for investors.  The Fund achieves this by investing in  corporate ‘champions’ of India. These companies have successfully generated larger profits and created a huge amount of wealth for its investors. The following are the key factors the fund focuses on:

• Moat Detection: The fund utilises the concept of economic moats to identify companies with proven records to invest in. The clear competitive advantage that protects their market position can be optimum for booking profits and attaining maximum returns. 
• Management Strength: This evaluation of the companies extends beyond the firm in itself. The fund manager also assesses the management team’s capability to sustain and strengthen the company’s moat over time.
• Value-Driven Selection: The fund prioritises companies with strong fundamentals that are available at or below fair valuations, maximising potential returns for investors.

Benchmark – Nifty Large Midcap 250 Total Return Index 

The NIFTY Large Midcap 250 Total Return Index serves as a benchmark for mutual funds and other investments that invest in large cap and midcap companies. These funds use the index’s performance to measure their success. 

Getting Started 

If this unique approach resonates with your investment goals, here’s how you can embark on your wealth creation journey!

• Minimum Investment: the minimum investment amount required for this fund is Rs. 500. You can start investing through a Systematic Investment Plan (SIP) or a lump sum investment.
• Investment Timeframe: The fund is designed for long-term wealth creation. Align your investment goals with a long-term horizon to maximise your potential returns.

Who Should Consider This Fund?

This fund caters to investors seeking:

• Long-term capital appreciation through a moat-focused strategy.
• Exposure to a diversified basket of large-cap and mid-cap companies.
• Investment in companies with sustainable competitive advantages.

Conclusion

The Bajaj Finserv Large Cap Fund offers a promising option for investors seeking long-term growth through a unique moat-focused strategy. Remember, you must carefully consider your risk tolerance and investment goals before making any investment decisions. Mutual Funds are subject to market risks, please make these decisions at your own discretion, or with the help of an expert.