5 good large-cap funds

By Morningstar Analysts |  14-12-16 | 
 

Reliance Top 200

  • Inception Date: August 8, 2007
  • Analyst rating: Silver (given in June 2016)
  • Star Rating: 4 stars
  • Fund Manager: Sailesh Raj Bhan since August 8, 2007

From a pure-play large-cap strategy known as Reliance Equity Advantage, the fund’s investment approach underwent a change in August 2011.

The investment universe covers the top 200 companies by market cap, allowing investments in small/mid-caps.  The weightings of a few sectors may align with those of the BSE 200 based on Bhan’s view on those sectors, but he is willing to make bigger sector deviations.

Bhan’s ability to pick fundamentally sound stocks and understand long-term trends makes this fund a good pick.

Though the fund delivered a staggering 41% return in 2012, putting it in the top 5 of the category that year, over the past 8 calendar years, it has also seen its returns dip below the category average.

Over the past 5 years, the fund has delivered a very impressive 18% annualized return.

Read a more detailed analysis here.

ICICI Prudential Focused Bluechip

  • Inception Date: May 23, 2008
  • Analyst rating: Bronze (given in May 2016)
  • Star Rating: 4 stars
  • Fund Manager: Manish Gunwani since January 2012

Gunwani has a quality bias when picking stocks--he uses the fund house’s in-house large-cap model portfolio as his initial reference point. He adds his internal overlay where he performs competitive analysis and applies qualitative filters to identify the best pick within the sector.

Interestingly, he plies a benchmark-conscious approach and aligns the portfolio’s sector weights to those of the benchmark index S&P CNX Nifty.

From being tremendously focused (the 20 best investment ideas in the large-cap space), the surge in assets has led to an increase in the number of holdings in the portfolio.

When the above fund, Reliance Top 200, was topping the charts in 2012, this fund slumped. In its history, it was the only calendar year in which it underperformed the category average. But the very next year it climbed the charts while Reliance Top 200 took a dive. In the long run, the 5-year annualized return of ICICI Prudential Focused Bluechip is a nice 15.75%.

Read a more detailed analysis here.

Birla Sun Life Frontline Equity

  • Inception Date: August 30, 2002
  • Analyst rating: Silver (given in February 2015)
  • Star Rating: 5 stars
  • Fund Manager: Mahesh Patil since November 2005

In April this year, Kaustubh Belapurkar, Director of Fund Research at Morningstar Investment Adviser, revisited the analysis and recommended it on CNBC-TV18.  

A growth bias is apparent as Patil focuses on factors such as ROCE, ROE and earnings growth potential. Around 88% of the portfolio is in large caps and the number of stocks is well diversified at 80.

Though the fund manager loosely aligns his portfolio to the BSE 200 sectoral weights, his great stock picking skills are the result of his bottom-up strategy.

If one looks at consistency of returns; over the last 10 years the fund has been a quartile one or two performer throughout. And over the past 5 and 10 years, the fund has outperformed the category average by around 400 bps on an annualized basis.

Read a more detailed analysis here.

SBI Bluechip

  • Inception Date: February 14, 2006
  • Analyst rating: Bronze (given in July 2016)
  • Star Rating: 4 stars
  • Fund Manager: Sohini Andani since September 1, 2010

The fund uses in-house templates and processes that are key to the execution of the strategy. Despite being a large-cap fund, the mandate allows the manager to invest up to 20% in mid-caps. Andani tends to invest in mid-caps with a relatively higher market capitalisation and currently has an exposure of 14.46% to midcaps here.

Andani is an experienced portfolio manager and an astute stock-picker. Her extensive experience as an analyst and a research head stands out in her bottom-up approach to stock selection.

Kaustubh Belapurkar also recommended this fund on CNBC-TV18 and noted that from being at the bottom of the pile in terms of performance around 5 years ago, the fund has impressed. The 3- and 5-year annualized returns are nothing short of impressive (20%), but the 10-year return is just about 11%.

Andani has brought a very sharp focus to the fund and brings a lot of value. If the Sensex were to fall by 5%, this fund would probably only fall by 3%. Andani protects capital in those times and on the upside she captures most of the upside.

Read a more detailed analysis here.

ICICI Prudential Top 100

  • Inception Date: July 9, 1998
  • Analyst rating: Silver (given in April 2015)
  • Star Rating: 4 stars
  • Fund Manager: Sankaran Naren since February 1, 2012

This was the third fund Kaustubh Belapurkar recommended on CNBC-TV18.

The fund has a slightly different large-cap strategy which is more aggressive when compared to other funds from the AMC’s stable. It is a regular diversified large-cap fund with a contra strategy.

Naren looks at sectors where the valuations are slightly depressed but the growth potential is still there. For instance, Power Grid which is one of the stocks that has done well. Larsen & Toubro is one of the top performers in this portfolio over the last five years. So while a lot of fund managers tend to hold banks, pharmaceuticals and technology stocks which have done well, he has taken a contra call on some of sectors which have played out well for him.

The fund has its ups and downs but its long-term performance speaks volumes – 19% annualized over 15 years.

Read a more detailed analysis here.

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