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Investors with a long-term perspective can buy the units of Reliance Large Cap (erstwhile Reliance Top 200), a large-cap- oriented equity fund that has delivered handsomely over the long run. Following SEBI’s categorisation and rationalisation of mutual fund schemes, the fund shifted its focus from a diversified equity scheme to one that predominantly invests in large-cap stocks. The fund is now benchmarked against S&P BSE 100 from its previous benchmark of S&P BSE 200.
Reliance Large Cap invests in the stocks of top 100 companies in terms of full market capitalisation; this lends comfort in the current volatile market. The fund invests in industry leaders or potential leaders with reasonable valuation and high growth potential.
Performance
The volatility in the market has seen mid- and small-caps tumble 10.6 per cent and 14.7 per cent, respectively, over the past year; large-cap stocks, on the other hand, have contained the downside well and fallen just 0.66 per cent in this period. Within the large-cap category, Reliance Large Cap has been a resilient performer and declined 0.6 per cent over the last year.
The fund has outperformed its peers — HDFC Top 100, Aditya Birla Sun Life Frontline Equity and SBI Bluechip — over the past year. Over five- and 10-year periods as well, Reliance Large Cap has outshined its benchmark by a margin of 3.3-5.7 percentage points. Across all time-frames, the fund has been placed in the top quartile, making it reliable for the long term. Investors with a long-term horizon can take the SIP (systematic investment plan) route to tide over the current market volatility.
Portfolio
Banking has been the top preferred sector for the fund. Following a dip in allocation in the last quarter of 2017, the fund increased its allocation to this sector. Private sector bank stocks such as HDFC Bank and ICICI Bank have been resilient and delivered good returns over the past year. While slightly trimming the allocation to software and automobiles, the fund has marginally increased exposure to petroleum products, industrial capital goods and industrial products sectors.
Exiting the cement sector in August, the fund added construction and metal sectors to the portfolio. For instance, the fund exited its allocation to ACC and added Vedanta.
The fund has good exposure to the pharma sector, which is the second preferred sector. The outperformance of Divi’s Laboratories appears to have helped the fund cushion the downside over the past year.
Siemens and HCL Technologies are the other new additions to the kitty, taking its holding to 49 stocks.
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