Betting on Market Leaders Pays Off
Tata Large Cap Fund
In the recent months, the valuation gap between large-sized and mid-sized companies has been narrowing. At present, the Nifty is trading at price-to-earnings (PE) multiple of 20.7, while BSE Midcap index is trading at PE multiple of 25.8. Given this gap, there is an increasing focus on buying large-cap companies. There are a few other reasons for interest in large caps. Large-size companies have relatively better balance sheets, established business models, brands and market share and ability to perform relatively better in downturn. Given these advantages and volatile markets, it makes sense to be invested with large-cap schemes.
Among large-cap schemes, Tata Large Cap is one of the few which have high exposure to large caps and very minimal exposure to small caps. Unlike most large-cap schemes, this scheme has close to 90% of its portfolio invested in big companies and less than 10% in midcaps. Among the large caps, the scheme has exposure to companies which pay high dividends and have dominant market share in their respective sectors. The scheme’s another distinguishing factor is consistency of returns. In bull markets, it has beaten its benchmark by a considerable margins. But its returns have been not been conspicuously stupendous as some of its peers.
Indian Oil Corporation
Increase in Allocation