L&T India Large Cap - Buy. Sticks to safe bluechips

Thanks to the slowdown in the Chinese economy and Greece’s debt worries, any pull out of capital by foreign investors may keep Indian equities volatile in the near term.

It may hence, be better to stick to safe large-cap funds with a good track record of containing downsides and delivering benchmark beating returns. L&T India Large Cap is one such scheme that you can consider.

It sticks to its mandate of taking exposure to large-caps and mainly invests in stocks in the Nifty or at best the BSE 100 basket. At times, it takes mild mid-cap exposure as well. Its returns across one-, three- and five-year timeframes have not just been better than the benchmark but also higher than the category average. Investors with a five-year horizon and moderate risk appetite can consider buying units of the fund. Systematic investment too can be considered in the scheme owing to its proven track record over the years.

In the past, the scheme has been able to arrest the fall in NAVs during bear phases reasonably well. For instance, during the January-August 2013 period, even as its benchmark BSE 100 Index lost about 14 per cent, the fund was successful in arresting the decline to 11 per cent.

Increasing allocation to bluechip large-cap stocks during volatile phases has helped L&T India Large Cap Fund fare better than its benchmark. Consider the January-August 2013 period. The fund had parked over 90 per cent of its assets in relatively sturdy bluechip stocks during this period; this aided the fund’s performance.

Besides averting the steep fall in NAVs during corrective phases, L&T India Large Cap Fund has been able to deliver returns in line or even better than its benchmark — BSE 100 Index, during recovery phases too.

The fund’s performance has been consistent over the last five years. Its annual returns have been better than BSE 100 almost 70 per cent of the time. After the lacklustre performance in 2012-13, L&T India Large Cap Fund has managed to come back strongly over the last couple of years.

Currently, more than 80 per cent of the scheme’s assets are invested in large-cap stocks.

HDFC Bank, L&T, Maruti Suzuki, Lupin and Axis Bank are some top picks that figure in its portfolio. Eicher Motors, Bharat Electronics, Adani Ports and Shree Cement are some other key picks, which have aided the fund’s performance.

In the last one year, the fund has increased exposure to stocks in the pharma, industrial goods and cement space.

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