Investing in mutual funds can seem daunting, especially with so many options to choose from. The Bajaj Finserv Large Cap Fund stands out with its unique investment approach. This fund adopts a concentrated investment strategy with a high active share to potentially deliver market-beating returns in the long term.
This article tells you more about how this fund works and why it may be suitable for your portfolio.
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Concentrated portfolio
Large-cap stocks are typically well-established companies with strong financials and a history of relatively stable growth. These are companies ranked between 1 and 100 on the stock exchange.
From this investment universe, the Bajaj Finserv Large Cap Fund narrows down to a concentrated portfolio of 25-30* stocks.
High-conviction stock selection
This concentrated approach is accompanied by a high-conviction stock selection process. Fund managers carefully craft the portfolio based on extensive research and analysis.
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These stocks are selected after a detailed evaluation of the company’s financial health, business model, management quality, and growth potential. They are chosen for their favourable prospects for long-term growth.
High active share
Active share is a measure of how different a fund’s portfolio is compared to its benchmark index. A higher active share indicates a greater degree of active management, because fund managers do not closely mirror the benchmark index.
The Bajaj Finserv Large Cap Fund has a high active share, aiming to outperform the benchmark in the long term.
Why invest in Bajaj Finserv Large Cap Fund
The Bajaj Finserv Large Cap Fund can be suitable for investors who seek an active management style that has the potential to offer benchmark-beating returns in the long term. Here are some of its advantages
- Growth potential: By investing in large-cap companies, the fund offers relatively stable growth potential.
- Experienced fund managers: The fund is managed by investment experts who rely on data-driven strategies and years of experience to make investment decisions.
- High conviction stock selection: The portfolio comprises stocks that are chosen by skilled fund managers after thorough research and based on their strong belief in their long-term growth prospects.
How to invest in Bajaj Finserv Large Cap Fund
You can invest in Bajaj Finserv Large Cap Fund directly through Bajaj Finserv Asset Management Ltd. You can also invest through a registered distributor or aggregator. You can invest both online and offline.
Investment options are available in lumpsum and SIP. The minimum investment amount starts at Rs. 500.
SIP in a large-cap fund
Investing in a large-cap fund through a Systematic Investment Plan (SIP) can be a suitable move for investing novices or salaried professionals. SIPs allow you to invest a fixed amount regularly – daily, weekly, monthly, quarterly, etc. This enables consistent and disciplined investing.
Additionally, SIPs offer the advantage of rupee cost averaging. When you invest a fixed amount regularly, regardless of market conditions, you end up buying more units when markets are down and fewer when they are up. As a result, you leverage market downs and avoid buying too much at market peaks. Over time, this typically reduces the per-unit investment cost.
Moreover, through the power of compounding, SIPs in large-cap funds can potentially build significant wealth over time even through affordable investments.
Compounding means earning potential returns not just on your initial investment but also on the returns you’ve already earned. For example, if you invest Rs. 1,000 and earn Rs. 100, you’ll now earn subsequent potential returns on an investment base of Rs. 1,100. The longer you stay invested, the more powerful compounding can become.
Use an SIP top up calculator
If you’re looking to boost your SIP contributions, consider a top-up SIP. This facility allows you to increase your SIP contributions by a fixed percentage at regular intervals. Over time, through gradual increments, you can significantly increase your invested capital and thereby, potential investment growth. An SIP top up can also enhance the potential for compounding, as it increases your investment base steadily.
An SIP top up calculator can help you visualise the potential effect of this approach compared to a regular SIP. All you need to do is enter your starting SIP amount, top-up rate and frequency, and the expected returns on your investment. The calculator shows you the potential size of your final corpus with and without the top up feature. However, it is essential to remember that the calculator’s estimates are based on your inputs, and there is no assurance that returns will be along the expected lines.
*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 a total number of stocks in the portfolio.
Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.