What is Large Cap Fund?

If we are to define a large-cap fund, any large-cap fund has to maintain a minimum 80% exposure in large-cap stocks. The remaining 20% may be invested in small-cap or mid-cap funds.

The definition of the large-cap fund is that there are a top hundred companies by market capitalization, according to SEBI regulations, which is revised every six months. 80% of your portfolio must be in these top 100 companies.

The fund managers have total freedom over the remaining 20% to invest in large-cap, mid-cap, or small-cap, wherever they see opportunity.

Large-cap fund, as I mentioned, by definition and by the construct of it, has minimum 80% invested in large-cap.

Now large-cap companies, generally, are bigger companies, which because of their size are also stable companies. We usually do not see much volatility in their price. But once in a while, even huge companies provide very good investment opportunities.

About Tata Large Cap Fund Manager

Rupesh Patel, senior fund manager, and manager of Tata large cap fund a part of Tata Asset management limited. He has more than 19 years of experience spread across listed equity investment, private equity real estate investment, risk credit assessment and evolution of infrastructure projects.

Tata Large Cap Fund Analysis

So, Tata large cap fund is focused on large-cap category, where 80% of the fund construct is in large-cap stocks. When it comes to fund construction there are many approaches.

One approach might be to construct the fund around the benchmark in case of Tata large-cap fund Sensex is the benchmark. If you construct your funds around the benchmark, then your returns will be benchmark plus or minus.

Another way adopted by Tata large-cap fund is that they pick stock on a bottom-up basis, irrespective of whether it is in the stock index or not, or what it weight is on a bottom-up basis. You can build a portfolio of good companies with compounding characteristics and better management quality, which quote less than their fair-value.

In recent time large cap funds are under performing their benchmarks. I believe over a longer period of time, a portfolio of right stocks selected on bottom up basis would deliver a superior results as compared to the benchmark.

Manager of Tata large cap fund also quoted that “we make portfolios on bottom-up basis. We have almost 25 such stock in our portfolio which are our good conviction calls. We think that this portfolio over a period of time will generate returns higher than the index. As we do our bit by following a disciplined approach, investing for 3 to 5 years horizons and remaining invested through volatility would be my recommendation for all of the investor”

To explore more on investment options, and for financial management ideas please visit here: https://creditgyani.com/