L&T India Large Cap: Invest

Investors can buy the units of L&T India Large Cap. The fund is not a top-of-the-chart performer, but manages a steady show over three-four years’ timeframe.

Premature lowering of pharmaceutical exposure, holding poor performers in the power sector and a lower share of equities itself in the portfolio limited returns of L&T India Large Cap in the past six months.

The fund invests predominantly in large-cap stocks, but also takes debt exposure from time to time.

Holding a large-cap portfolio may serve to ride out the volatility currently plaguing the markets since such companies are usually more stable in terms of earnings. Conservative investors can buy units of the fund in small amounts.

L&T India Large Cap can be considered as a diversifier for an investor with a moderate risk appetite. Investments can also be done in the form of SIPs to average costs.

Performance

Over a three- and five-year timeline, the fund has beaten its benchmark BSE 100 by a margin of one and five percentage points. Its performance is better than peers’ such as DSPBR Top 100 over the longer term.

L&T Large Cap has scored during market downswings, limiting losses much better than the benchmark. In the 2011 fall, for example, the fund fell five percentage points less than its benchmark.

But in the 2012 market upswing, the delay in shifting out of safer investments such as cash, fixed deposits and bonds limited the fund’s returns.

When the markets picked up post May 2012, for instance, the fund averaged equity investments of just about 90 per cent. It has upped its equity investments this year, which is beginning to show in its performance.

On a five-year annual rolling return basis, the fund has beaten its benchmark about 80 per cent of the time.

Portfolio and strategy

The banking and finance sector is usually the top holding in the portfolio. The fund has picked up strong performers such as Kotak Mahindra Bank, HDFC Bank and ICICI Bank early on.

The other top sector has been software, with stalwarts such as TCS and Infosys as well as HCL Technologies.

The fund has usually managed timely addition and reduction of sector exposure. It began slowly building holdings in FMCG and related consumer stocks from 2011 onwards.

Bets in the auto space such as Maruti Suzuki and M&M have also panned out well. Similarly, it has recently added telecom stocks in Idea Cellular and Bharti Airtel, which turned out well.

But failure to pare exposure to the power sector dealt a blow to portfolio performance of late.

Similarly, early cutting down of holdings in pharmaceutical performers, heavy exposure to oil and refineries also weighed on returns.

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