Bandhan Large Cap Fund: A suitable fund in the current market scenario

Market context: Why the large cap?

The market has rallied after the Lok Sabha election results were declared. Both Nifty and Sensex are trading at record highs. While the spotlight has been on Nifty and Sensex, the broader market has outperformed the headline indices. In the last 1 year (ending 19^th June 2024), Nifty Midcap 150 TRI and Nifty Small Cap 250 TRI gave 57% and 62% returns respectively (source: Advisorkhoj). As per AMFI monthly data, the assets under management (AUM) of the midcap fund category crossed the AUM of the large cap fund for the first time in history in May 2024. The AUM of small cap funds crossed the AUM of most diversified equity funds.

The huge inflows into midcaps and small caps have raised concerns about stretched valuations (see the chart below). Back in February, SEBI issued an advisory to the asset management companies (AMCs) regarding froth building up in midcap and small cap stocks. In the current market scenario, a more balanced asset allocation can be a prudent investment strategy.

Source: National Stock Exchange, as of 19^th June 2024

Large cap companies are established names and market leaders. These companies have a high percentage ownership of institutional investors and have more efficient price discovery. Large caps are less volatile than midcaps and small caps. The chart below shows the biggest market drawdowns in the last 20 years or so. You can see that large caps had smaller drawdowns compared to midcaps and small caps.

Source: Advisorkhoj Research, as of 31^st May 2024

While large caps are relatively less volatile than mid/small caps, large caps have the potential to giveinflation-beating returns in the long term (see the chart below). Financial advisors recommend that large caps form a significant part of your core equity portfolio. In this article, we will review the Bandhan Large Cap Fund.

Source: Advisorkhoj Research, as of 31^st May 2024

Bandhan Large Cap Fund – B-M-V Investment Philosophy

Bandhan Large Cap Fund – Stock Selection Criteria

Outperformed the fund benchmark and category average

Many investment experts think that it is difficult for large caps to outperform the market benchmark index because of the efficient price discovery in this segment, in other words, difficult for fund managers to identify undervalued stocks. Bandhan Large Cap has outperformed the benchmark index and the category average over different timescales, creating alphas for investors – an outstanding track record.

Source: Advisorkhoj Research, as of 19^th June 2024

Consistent upper quartile fund

Though the performance of the fund may have been a bit inconsistent in the past, the performance consistency has improved substantially in the last 5 years – 4 times in the top 2 quartiles in the last 5 years.

Source: Advisorkhoj Research, as of 19^th June 2024

Consistently outperformed peer average across market conditions

The chart below shows the three-year rolling returns (i.e. returns over 3-year investment tenures) of Bandhan Large Cap Fund versus the large cap category average since 2019 (1^st January 2019). You can see that the fund was able to outperform the category average with a high degree of consistency across different market conditions. A very impressive statistic of the fund is the percentage instances of more than 15% CAGR returns – the fund gave 15%+ CAGR returns in nearly 65% of the instances in the last 5 years or so.

Source: Advisorkhoj Research, as of 19^th June 2024

Smaller drawdowns compared to the market index

The chart below shows some of the largest market drawdowns since the inception of the fund. You can see that the Bandhan Large Cap Fund was able to limit the downside for its investors.

Source: Advisorkhoj Research, as of 19^th June 2024

Wealth creation track record

The chart below shows the growth of Rs 10,000 monthly SIP in Bandhan Large Cap Fund since the inception of the scheme. You can see that with a cumulative investment of only around Rs 20 lakhs you could have accumulated a corpus of over Rs 70 lakhs.

Source: Advisorkhoj Research, as of 31^st May 2024

Current portfolio positioning

Source: Advisorkhoj Research, as of 31^st May 2024

Who should invest in the Bandhan Large Cap Fund?

• Investors who are looking for capital appreciation with a long-term investment horizon.


• Those who are looking to build their core portfolio with large-cap stocks.


• Those who have an investment horizon of more than 3 years.


• The fund is suitable for first-time or new investors


• You can invest in this fund either in lump sum or SIP depending on your financial situation or investment needs


• Investors should consult with their financial advisors or mutual fund distributors if Bandhan Large Cap Fund is suitable for their investment needs.

Disclaimer:

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

The Disclosures of opinions/in house views/strategy incorporated herein is provided solely to enhance the transparency about the investment strategy / theme of the Scheme and should not be treated as endorsement of the views / opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document has been prepared on the basis of information, which is already available in publicly accessible media or developed through analysis of Bandhan Mutual Fund (formerly known as IDFC Mutual Fund). The information/ views / opinions provided is for informative purpose only and may have ceased to be current by the time it may reach the recipient, which should be taken into account before interpreting this document. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision and the security may or may not continue to form part of the scheme’s portfolio in future. Investors are advised to consult their own investment advisor before making any investment decision in light of their risk appetite, investment goals and horizon. The decision of the Investment Manager may not always be profitable; as such decisions are based on the prevailing market conditions and the understanding of the Investment Manager. Actual market movements may vary from the anticipated trends. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alterations to this statement as may be required from time to time. Neither Bandhan Mutual Fund (formerly known as IDFC Mutual Fund)/ Bandhan Mutual Fund Trustee Limited (formerly IDFC AMC Trustee Company Limited) / Bandhan AMC Limited (formerly IDFC Asset Management Company Limited), its Directors or representatives shall be liable for any damages whether direct or indirect, incidental, punitive special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information.