Bajaj Finserv Large Cap Fund: Invest in market leaders in uncertain times

Current Market Context

Trade uncertainties and lacklustre Q1 corporate earnings dragged Nifty 50 down almost 600 points in the last 1 month (as on 12^th August 2025). The Trump Administration's 25% tariff on India's exports to the United States has come into effect from 7^th August 2025. However, on 6^th August, the US Administration announced that an additional 25% tariff will be levied on India's exports from 27^th August 2025. The tariff rate imposed by the United States on India is among the highest in the world. In such times of economic uncertainty, large cap stocks can provide stability to your portfolio and limit downside risks. In this article, we will review the Bajaj Finserv Large Cap Fund.

Characteristics of large cap stocks

SEBI classifies the top 100 companies by market capitalization as large cap companies. As per SEBI's mandate, large cap funds must invest at least 80% of their assets in large cap companies or stocks.

• Large cap companies are the biggest companies in India in terms of revenues and profit after tax (PAT).


• Large cap companies are industry leaders (market share leaders) in their respective industry sectors.


• Due to their market leadership and strong balance sheets, large cap companies tend to be more resilient in economic downturns.


• Large cap stocks can be proxy plays for several sectors, e.g. energy, paints, IT software, e-commerce, NBFCs, PSU and private sector banks, etc, since they dominate these sectors in terms of market cap, revenues and PAT.


• The core sectors of the Indian economy, like coal, oil and gas, petroleum products, steel, cement, power, etc, are dominated by large cap companies.

Why invest in large caps now?

• Large caps (Nifty 100 TRI) have outperformed midcap (Nifty Midcap 150 TRI) and small cap (Nifty Small Cap 250 TRI) year to date 2025 (see the chart below).
  
  

  

  Source: National Stock Exchange, Advisorkhoj Research, as on 11^th August 2025



• Historically large cap stocks have seen lesser drawdowns (correction from market highs/ peaks) in bear or highly volatile markets. The table below shows the biggest drawdowns in the market over the last 20 years. You can see that large caps (represented by Nifty 100 TRI) had smaller drawdowns compared to midcaps (represented by Nifty Midcap 150 TRI) and small caps (represented by Nifty Small Cap 250 TRI).
  
  

  

  Source: National Stock Exchange, Advisorkhoj Research.



• Superior consistency in performance: The chart below shows the 3-year rolling returns of Nifty 100 TRI versus Nifty Midcap 150 and Nifty Small 250 TRI indices, respectively, over the last 20 years. You can see that fluctuations/variations in returns in different market conditions are much lower in large caps compared to midcaps and small caps. Large cap stocks not only limited downside risks but also had significantly fewer instances of negative returns, providing a more stable experience to investors. As such, large cap funds can be suitable investment options for new investors.
  
  

  

  
  

  

  Source: National Stock Exchange, Advisorkhoj Research.



• Despite higher volatility, investment flows to midcap and small cap funds have remained strong (see the chart below). Strong flows to midcaps and small caps may have played a significant role in these market cap segments in the market pullback between April to July but also raise concerns about valuations in an environment where corporate earnings were below market expectations.
  
  

  

  Source: National Stock Exchange, Advisorkhoj Research, as on 31^st July 2025



• The graphic below shows the valuations of different market segments since September 2024. You can see that large cap valuations are considerably down from peak valuations. On the other hand, small cap valuations have crept back up again. As far as midcaps are concerned, even though midcap valuations have corrected more than large caps, the valuations of midcap stocks are still at a premium to large caps. In the current market conditions, large caps seem more reasonably valued relative to midcap and small caps in current market conditions.
  
  

  

  Source: NSE, Advisorkhoj Research, as on 31^st July 2025.



• Large caps usually have a large percentage of institutional ownership compared to midcaps and small caps. Large caps are well researched and provide better visibility of earnings compared to midcaps and small caps. In times of economic uncertainty, visibility of earnings is a very important factor in stock selection and fund performance.


• Large caps have wealth creation potential over a long investment horizon. The chart below shows the growth of a Rs 10,000 investment in Nifty 100 TRI over the last 20 years. You can see that the investment would have grown 14X in the last 20 years at a CAGR of 14%.
  
  

  

  Source: NSE, Advisorkhoj Research, as on 31^st July 2025.

About Bajaj Finserv Large Cap Fund

• The fund has a highly concentrated portfolio with high conviction in stock selection


• The fund has a high active share with an aim to outperform the benchmark index over the long term.


• Based on the INQUBE Investment Philosophy
  
  

  

Current portfolio positioning - High active share

The fund has an active share of 53% (as on 31^st July 2025). A high Active Share score is said to indicate that a fund's holdings differ from the benchmark index and that the portfolio manager is actively managing it. The higher the active share, the higher the potential for alpha creation over a sufficiently long investment horizon. The table below shows the Top 10 holdings of the fund.

Source: Bajaj Finserv Fund Factsheet, NSE, Advisorkhoj Research, as on 31^st July 2025.

The fund invests in established market players with potential for returns in the long term, even in volatile conditions.

• Pharmaceuticals & insurance exposure - Highlights belief in healthcare and financial protection as critical for navigating uncertainties and sectoral resilience.


• Consumer staples & telecom presence - Indicates belief in steady cash flow generation due to recurring demand, regardless of market disruptions.


• Digital economy exposure - Reflects optimism in India's tech-driven transformation and future growth potential.
  
  

  

  Source: Bajaj Finserv Fund Factsheet, as on 31^st July 2025.

Who should invest in Bajaj Finserv 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 a lump sum or through SIP, depending on your financial situation or investment needs.

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