In the context of Indian stock markets, there is lack of consensus with regards to the definition of large caps, mid caps and small caps. So most fund houses have their own definitions for various stock categories.
The situation is no different on the mutual fund side. There is no unanimity in what constitutes a large cap fund. Basically, there are two breeds of large cap funds. One is the predominantly large cap variety, whereas the other is the ‘true blue’ large cap category.
Predominantly large cap funds have the liberty to invest smaller portion of their assets in mid caps, thereby diversifying their holdings. Conversely, ‘true blue’ large cap funds invest only in large cap stocks. While the former is a common breed in the domestic mutual fund industry, the latter is bit of a rarity.
DSP ML Top 100 Equity Fund (DMLT) belongs to the rare breed of pure large cap funds. But before venturing into its investment proposition, let’s first understand the benefits of investing in large cap funds.
Benefits of investing in large cap stocks/funds
Large cap companies typically have well-established track records in terms of earnings/profitability among other factors. These companies are also well-researched as information on them is widely available, so the chances of making a wrong investment call are relatively lower. This makes their performance more predictable when compared to their mid/small cap peers. Large cap funds, given their investments in large cap stocks, imbibe similar traits. These funds are also less risky compared to mid and small cap funds. It is due to these reasons we advocate that investors with risk appetite must invest in well-managed large cap funds, so as to infuse stability in their portfolios over the long-term.
DMLT’s investment proposition
DMLT is an open-ended diversified equity fund from the stable of DSP Merrill Lynch Fund Managers. The fund’s name as well as its investment objective - ‘to invest in equity securities and equity related securities of the 100 largest corporates, by market capitalisation, listed in India’, clearly defines its investment mandate. And in line with its investment objective, large cap stocks dominate the fund’s portfolio.
The fund is mandated to invest atleast 90% of assets in equities and related instruments, while upto 10% of the assets can be invested in debt and money market instruments. For stock picking, it adopts a combination of the top down and bottom up approaches. It invests in both, growth as well as value stocks.
The situation is no different on the mutual fund side. There is no unanimity in what constitutes a large cap fund. Basically, there are two breeds of large cap funds. One is the predominantly large cap variety, whereas the other is the ‘true blue’ large cap category.
Predominantly large cap funds have the liberty to invest smaller portion of their assets in mid caps, thereby diversifying their holdings. Conversely, ‘true blue’ large cap funds invest only in large cap stocks. While the former is a common breed in the domestic mutual fund industry, the latter is bit of a rarity.
DSP ML Top 100 Equity Fund (DMLT) belongs to the rare breed of pure large cap funds. But before venturing into its investment proposition, let’s first understand the benefits of investing in large cap funds.
Benefits of investing in large cap stocks/funds
Large cap companies typically have well-established track records in terms of earnings/profitability among other factors. These companies are also well-researched as information on them is widely available, so the chances of making a wrong investment call are relatively lower. This makes their performance more predictable when compared to their mid/small cap peers. Large cap funds, given their investments in large cap stocks, imbibe similar traits. These funds are also less risky compared to mid and small cap funds. It is due to these reasons we advocate that investors with risk appetite must invest in well-managed large cap funds, so as to infuse stability in their portfolios over the long-term.
DMLT’s investment proposition
DMLT is an open-ended diversified equity fund from the stable of DSP Merrill Lynch Fund Managers. The fund’s name as well as its investment objective - ‘to invest in equity securities and equity related securities of the 100 largest corporates, by market capitalisation, listed in India’, clearly defines its investment mandate. And in line with its investment objective, large cap stocks dominate the fund’s portfolio.
The fund is mandated to invest atleast 90% of assets in equities and related instruments, while upto 10% of the assets can be invested in debt and money market instruments. For stock picking, it adopts a combination of the top down and bottom up approaches. It invests in both, growth as well as value stocks.
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