Those seeking to invest in large-cap stocks which are on the path of recovery can buy the units of Edelweiss Large Cap, a fund that has delivered stable returns in the long run.

Over the past 10 years, the scheme has delivered a compounded annual growth rate (CAGR) of 9.9 per cent and outperformed its benchmark (Nifty 50 TRI) returns of 8.5 per cent as well as the category average returns of 8.3 per cent.

However, the performance of the fund over the past three and five years has been slightly below that of the Nifty 50 TRI.

Over the last one year, though, the scheme seems to have made a comeback. In this time period, Edelweiss Large Cap clocked 4.7 per cent, comfortably exceeding the benchmark return of 2.4 per cent. Moreover, it has delivered higher returns than peers such as ICICI Prudential Bluechip and Mirae Asset Large Cap over the past one- and three-year periods.

Strategy and performance

The fund’s investment style has been the same since its inception — investing in growth at a reasonable price (GARP).

It tends to increase allocation to debt to tide over volatile markets and contain losses. It generally remains fully invested in equities but does take debt calls when the equity market witnesses uncertainty. Currently, it has high exposure to debt.

The fund has participated in upsides and contained downsides. For instance, it outpaced the benchmark as well as the category average during the market rallies of 2017 and 2019.

It also limited the downside well in the market corrective phases of 2011 and 2015.

Edelweiss Large Cap has delivered more than 2 per cent alpha, over the Nifty 50 index, 75 per cent and 93 per cent of the time on a rolling three- and five-year basis, respectively.

The scheme’s portfolio is well-diversified — it has about 65 stocks across more than 10 sectors. According to the recent factsheet, the fund has about 85 per cent in large-caps and the balance in mid-caps.

The scheme’s portfolio positioning is tilted towards defensive bets with overweight allocations ( vis-à-vis the benchmark) in sectors such as pharma, financial and capital goods; it is underweight on private banks, oil and gas, and technology.

Despite being underweight on software, it is among the top-preferred sectors for the fund along with consumer non-durables and pharmaceuticals.

While drastically reducing its allocation to banking and construction stocks, the scheme has upped its allocations to debt, petroleum products, telecom and cement sector stocks.

Exiting the pesticides sector, it recently added retailing, fertilisers and auto ancillary to its portfolio.

The top stock holdings are Reliance Industries, Infosys, ICICI Bank and ITC that have delivered mixed returns over the past year.

Barring the top six or seven stocks, the allocations towards other individual stocks is below 3 per cent.

The scheme’s recent stock additions include Avenue Supermarts, HDFC Life Insurance Company and Asian Paints.

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