Unfavourable global political events, worrisome surge in oil prices and rising dollar point out to the fact that the negative sentiment about equity markets in India is not expected to ebb anytime soon. Add to this, the implementation of the GST, which has still not brought about the expected shift in market share for large-sized companies from those in the unorganised space.
However, analysts and equity veterans reckon that despite all the uncertainty, it makes sense to be with large-sized companies, given their high cash flow from operations, consistent dividend-paying tradition and a dominant market share. Large-sized companies are expected to clock superior growth in revenues due to increasing business strength and influence resulting from improved market share. This fact justifies investment in mutual fund schemes which have singular focus on large-sized companies in their portfolios.
Among schemes that focus on large-sized companies, Aditya Birla Sun Life Frontline Equity has distinguished itself from its peers because of its stellar performance. Fund manager Mahesh Patil has outperformed even the scheme’s peers in the past 10 years. In the past five- and 10-year periods, the scheme has given 17 per cent and 15 per cent returns while its benchmark, Nifty50, has given 14 per cent and 11 per cent returns, respectively, during the same period. In the past six months, Patil has selected companies trading at fair valuations, such as Reliance Home Finance, Bharat Financial Inclusion, and Chennai Petroleum Corporation.
Expert Take: Suresh Sadagopan, Founder, Ladder7 Financial Advisories This is a well-diversified largecap fund which has shown a consistent performance since 2004, slipping only from 2017. The fund has had a stable fund management team ensuring consistency across time frames and follows a stock-selection approach of growth stocks at a reasonable price. The fund has done well in bull markets and has been able to cushion the fall in bear markets.
