The Hindu Business Line : Principal Large Cap Fund: Hold

Unit-holders can retain their investments in Principal Large-Cap Fund. The fund has the mandate to invest mainly in large-cap stocks with a market capitalisation of over Rs 3,500 crore. A small part of the portfolio may be invested in stocks with lower market capitalisation, but of not less than Rs 2,000 crore. The return from the fund is similar to that of its peers. However, it is too early to judge the performance of the fund, as it was launched just before the sharp rally witnessed in large-cap stocks.

Suitability: This fund carries a risk profile that is similar to a typical diversified fund. With a flexibility to invest in stocks with a market cap range of Rs 2,000-3,500 crore as well, it has the potential to deliver returns that are superior to a fund that maintains a strictly large-cap focus. The fund may form a small part of your portfolio.

Performance: The fund generated a return of 46 per cent for the past 10 months (since inception). During the same period, its benchmark CNX Nifty generated 42 per cent. The fund's return is similar to some of its large-cap diversified peers such as HDFC Top-200 and Franklin India Bluechip. These funds generated returns of 49 per cent and 44 per cent respectively. Despite the sharp correction in May, the fund bounced back, thanks to the presence of large-cap stocks.

Profile: Principal Large Cap has 34 stocks to its portfolio and the top ten account for 37 per cent of asset allocation. The fund seems to churn its portfolio actively. It pruned its exposure to capital goods close to the correction in May, when stocks in this sector took a big hit.

Only a few funds stayed away from the much-hyped non-ferrous metals during the sector's lifetime high.

This fund moved out of this area completely in March. During the market peak the fund increased its exposure to software and banks as a defensive bet. It appears to book profits regularly, even in large-caps. Some of the bluechips that are constants in the portfolio are Infosys, ITC, HDFC Bank, Reliance Industries and Siemens.

Fund Facts: Principal Large Cap Fund was launched in November 2005 and is managed by Mr Rajat Jain. The assets under management are Rs 299 crore and the entry load 2.25 per cent. The NAV per unit is Rs 14.8

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