Fund Pick: Nippon India Large Cap Fund is a diversified outperformer

Nippon India Large Cap Fund has featured in the top 30 percentile of the large cap funds category of CRISIL Mutual Fund Ranking (CMFR) for three consecutive quarters through March 2023.

The fund’s month-end assets under management increased to Rs 12,736 crore in March 2023, from Rs 8,676 crore in March 2020.

The fund’s objective is to invest in the top 100 companies by market capitalisation and ensure stability and liquidity in the portfolio while generating alpha.

Sailesh Raj Bhan and Ashutosh Bhargava have been managing the fund since August 2007 and September 2021, respectively.

Trailing returns

The fund has outperformed the benchmark (Nifty 100 Total Returns Index) and its peers (funds ranked under the large-cap category in March 2023 CMFR) over the past one-, two-, three-, five-, seven-, and 10-year trailing periods.

To put this into perspective, Rs 10,000 invested in the fund at its inception on August 8, 2007, would have increased to Rs 55,615 on April 26, 2023, which is an annualised rate of 11.53 per cent, compared with the category and the benchmark, which would have grown to Rs 46,301 (10.24 per cent per annum) and Rs 48,884 (10.62 per cent per annum), respectively.

A systematic investment plan is a disciplined mode of investing offered by mutual funds through which one can invest a certain amount at regular intervals.

Monthly investment of Rs 10,000 for the past 10 years in the fund, totalling Rs 12 lakh, would have grown to Rs 24.37 lakh (13.61 per cent annualised returns), compared with Rs 22.83 lakh (12.39 per cent annualised returns) in the benchmark as on April 26, 2023.

Portfolio analysis

In the past three years, the fund predominantly invested in large-cap stocks (averaging 83.47 per cent). Allocations to mid- and small-cap stocks averaged just 10.86 per cent and 4.60 per cent, respectively.

The portfolio was diversified across 21 sectors.

Banks dominated, with an average allocation of 22.22 per cent, followed by finance (13.34 per cent), petroleum products (9.71 per cent), consumer non-durables (9.22 per cent), and software (8.14 per cent).

Over the period under analysis, the fund took exposure to 122 stocks, holding 20 consistently. The key contributing stocks to the portfolio were State Bank of India, ICICI Bank, Infosys, Indian Hotels Company, and Tata Steel.