Bajaj Finserv Power of 3: Strategy to perform across market cycles

The greatest dilemma faced by investors is balancing investment styles in different market phases. Many investors diversify funds but often overlook style diversification. Portfolios with varied styles can reduce volatility and enhance long-term returns. Style diversification captures multiple market trends and spreads risk. Navigating investment styles through a strategic equity allocation framework enhances portfolio balance and long-term growth potential. Growth, Quality, and Value investing represent different approaches to equity allocation. Each style has its own unique characteristics, mindsets, and investment focuses. In this article, we shall review the Bajaj Finserv Power of 3- a strategic style of investment that has been formulated by Bajaj Finserv AMC.

Power of 3

Bajaj Finserv MF employs the Power of 3 - a strategy built around the basket of three funds (Flexi cap fund, Large & Mid cap fund, Multi cap fund), each offering a unique style tilt and diversified exposure across market caps. Together, they create a robust, holistic solution to help investors navigate uncertainty and pursue long-term growth. Within just a little less than 3 years, the funds have showcased impressive track records.

How Power of 3 will help investors in volatile markets?

The graphic below shows the calendar year returns of the broad market index (Nifty 500), the large and midcap index (Nifty Large Midcap 250) and the Multicap index (Nifty500 Multicap 50:25:25) over the last 10 years. You can see that different strategies / market cap allocations outperform / underperform in different market phases. Flexicap, large and midcap and Multicap each have a unique investment style and provide balanced exposure across styles / market cap.

Source : www.niftyindices.com, Advisorkhoj Research | Period: 1^st January 2016 to 30^th September 2025

Diversification basis Styles:

Growth: This style focuses on companies with above-average earnings growth potential. It often includes innovators and long-term trend beneficiaries (e.g., tech, green energy). It performs well during market volatility or economic slowdowns and in late-cycle environments where defensiveness is rewarded. The growth style is also desirable when markets shift focuses back to fundamentals and stability

Source : www.niftyindices.com | Period: 1^st January 2009 to 30^th September 2025

Value: This style invests in fundamentally strong companies trading below intrinsic value. It focuses on overlooked, misunderstood, or turnaround stories. The Value Style performs well after market corrections or during early economic recoveries.

Source : www.niftyindices.com | Period: 1^st January 2009 to 30^th September 2025

Quality: the Quality style focuses on companies with strong balance sheets, high return on capital, and consistent performance. It emphasizes durability, governance, and cash flow stability across cycles. This style performs well during market volatility or economic slowdowns, in late-cycle environments where defensiveness is rewarded, and when markets shift focus back to fundamentals and stability.

Source : www.niftyindices.com | Period: 1^st January 2009 to 30^th September 2025

Why Style Diversification Matters?

Style diversification helps you stay prepared for market fluctuations.

• Different styles win at different times: Winners rotate across Growth, Value, and Quality styles in different market phases. Diversifying across styles may be effective in balancing risks and provide relative stability to your portfolio. When one style lags, others can lift the portfolio. Multi-factor strategies help navigate changing markets with steady results.
  
  

  

  Source : www.niftyindices.com, Advisorkhoj Research |Growth is represented by Nifty Growth Sectors 15 TRI, Quality by Nifty 200 Quality 30 TRI and Value by Nifty 500 Value 50 TRI | Period: 1^st April 2016 to 31^st March 2025



• Enhances long-term returns: Diversified Investment like Power of 3, with a blend of growth, value and quality, would have delivered a CAGR ~19%, closely tracking individual style indices (see the chart below), proving that consistent diversification can rival individual strategies with lower concentration risk.
  
  

  

  Source : www.niftyindices.com, Advisorkhoj Research | All indices are Total Return Indices (TRI) | Period: 1^st January 2009 to 30^th September 2025

Bajaj Finserv Fund Strategies

• Flexi Cap Fund: The fund invests in stocks of companies which can benefit from the structural changes in the society called megatrends and profit pools across market caps. A Megatrend is a powerful long-term change that fundamentally reshapes economies, businesses, and consumer behaviour. These long-term changes are a result of transformational shifts that source from technological, policy driven, environmental or demographic changes. The fund is market cap and sector agnostic. The fund has outperformed category average across 1 year rolling periods since its inception.
  
  

  

  Source: Advisorkhoj Research, as on 15^th October 2025



• Large Mid Cap Fund: The fund invests in companies that have long term and durable competitive advantage (economic moats) such as brand strength, cost leadership, network effect, intellectual properties, switching costs, economies of scale and unique business model vis-à-vis their competitors. The fund selects stocks which have enduring advantage, can provide stability amid market fluctuations, potential profitability, long-term growth potential and high quality (on parameters like ROE, Debt Equity ratio etc).
  
  

  

  
  

  The fund has outperformed category average across 1 year rolling periods since its inception.

  
  

  

  
  

  Source: Advisorkhoj Research, as on 15^th October 2025



• Multi Cap Fund: The youngest of the 3 in the "Power of 3", the Bajaj Finserv Multicap Fund was launched in February 2025. The fund invests minimum 25% in each of the 3 market cap categories e.g., large cap, midcap and small cap, providing diversity across market caps and industry exposure. The fund employs a contrarian strategy wherein the fund manager aims to identify stocks that are currently out of favour in the market but have strong long term growth potential. A Multi Cap Fund employing a contrarian strategy can capitalize on themes like the business cycle, special situations, turnarounds, and undervalued stocks, ensuring a holistic and diversified approach to investing. The ability to mix contrarian insights with disciplined exposure across market caps positions a Multi Cap Fund to deliver healthy long-term returns, leveraging underpriced opportunities others may overlook. Unlike pure contra funds that exit stocks upon reaching intrinsic value, Bajaj Finserv Multi Cap Fund will allow for sustained exposure (see the graphic below), enabling the portfolio to ride the full growth wave and thereby, more wealth creation.
  
  

  

Low portfolio overlap

There is relatively low portfolio overlap between these schemes. You can invest in all three schemes and get richer diversification.

Source: Bajaj Finserv MF, Advisorkhoj Research as on 30^th September 2025

SIP in Power of 3

Systematic Investment Plans (SIPs) help manage volatility and encourage disciplined investing. The Flexi Cap quotient can adapt to changing market conditions. The Large & Mid Cap allocation provides consistency to your portfolio, while the Multi Cap portion adds to the alpha generation potential of the portfolio and can boost long term portfolio returns. Over long investment tenures, you can build a portfolio that is resilient and can help you achieve your wealth creation or other long term financial goals.

Who should invest in Power of 3?

• Investors looking for long term capital appreciation through diversified equity exposure


• Investors looking a mix of investment styles and strategies to build a resilient portfolio


• Investors with high-risk appetites


• Investors with minimum 5 years investment tenure

The allocation to each scheme will depend on your risk appetite and investment needs. You should consult with your financial advisor or mutual fund distributor if you need help in planning your investments.