Launched way back in 2007, as Reliance Equity Advantage Fund, the fund had a broader investment mandate where it could invest in stocks across market caps, although with a large cap bias. However, effective August 23, 2012, the fund was renamed as Reliance Top 200 Fund, while its investment universe was restricted to stocks present in the S&P BSE 200 index or the top 200 stocks by market capitalisation.

By categorizing to large cap, the fund has further trimmed its investment universe to top 100 stocks. SEBI’s classification demands that large cap funds should hold a minimum 80% investment in equity & equity related instruments of large cap companies. Large-cap stocks are defined as the top 100 companies by market capitalisation.

The fund managers, Mr Sailesh Raj Bhan and Mr Ashwani Kumar had been with the fund since its inception. However, in May 2018, the co-fund manager Mr Ashwani Kumar gave way to Mr Kinjal Desai to co-manage the fund.

Seeing the upsurge in its performance in 2017, the fund quickly attracted many investors, and also saw a dramatic increase in its AUM, from about Rs 3,500 crore to over Rs 10,000 crore within a year’s time.

It is noteworthy that the fund now has a new mandate and will share a common investment objective with its large cap peers. Will the fund managers be able to use the revised mandate to the advantage of the fund or will it lose its charm? Only time will tell.

In this brief analysis, we take a close look at the features and performance of Reliance Large Cap Fund, which was more driven by its broader investment mandate followed earlier.

For the entire list of scheme names changes, do read: Your Mutual Fund Scheme Renamed. What Should You Do?

Investment Objective of Reliance Large Cap Fund

The primary investment objective of Reliance Large Cap Fund is to seek to generate long term capital appreciation by investing predominantly into equity and equity related instruments of large cap companies. The secondary objective is to generate consistent returns by investing in debt, money market securities, REITs and InvITs.

Fund Details: Reliance Large Cap Fund

Fund Facts

Category	Large Cap Fund	Style	Blend
Type	Open ended	Market Cap Bias	Large Cap Fund
Launch Date	8-Aug-2007	SI Return (CAGR)	11.23%
Corpus (Cr)	Rs 10,126	Min./Add. Inv.	Rs 5,000 / Rs 1,000
Expense Ratio (Dir/Reg)	1.12% / 1.97%	Exit Load	1%

YTD as on July 11, 2018
(Source: ACE MF)

From April 28, 2018, the new investment allocation of Reliance Large Cap Fund –

• 80% - 100% to stocks of large cap companies as defined by the regulator and prepared by AMFI

• 0% - 20% to other equity and equity related instruments

• 0% - 20% to debt and money market instruments

• 0% - 10% to units of REIT/InvITs

• 0% - 10% to Non-convertible preference shares

Growth Of Rs 10,000, If Invested In Reliance Large Cap Fund 5 Years Ago

Reliance Large Cap Fund: Year-on-Year Performance

Reliance Large Cap Fund: Performance Vis-à-vis Category Peers

Rolling Period Returns

Scheme Name	Corpus (Rs Cr)	1 Year (%)	2 Year (%)	3 Year (%)	5 Year (%)	Std Dev	Sharpe
SBI BlueChip Fund	19,064	16.48	15.60	12.63	18.79	11.81	0.08
Essel Large Cap Equity Fund	143	17.27	16.50	12.21	14.83	12.93	0.08
Indiabulls Blue Chip Fund	395	18.67	16.91	11.82	13.99	14.21	0.11
Reliance Large Cap Fund	10126	21.34	17.96	11.63	18.35	13.96	0.07
ICICI Pru Bluechip Fund	17,496	19.69	18.08	11.56	17.27	12.21	0.10
Aditya Birla SL Frontline Equity Fund	20,203	16.79	16.64	11.41	17.87	12.52	0.07
HSBC Large Cap Equity Fund	686	18.52	17.84	10.48	14.34	12.92	0.09
Invesco India Largecap Fund	141	17.05	14.65	10.48	16.08	11.79	0.08
Kotak Bluechip Fund	1,322	15.52	13.97	10.29	15.44	12.46	0.05
Franklin India Bluechip Fund	7,933	13.90	13.71	9.97	14.62	11.83	0.04
Axis Bluechip Fund	2,234	22.86	15.51	9.95	16.09	12.64	0.12
Edelweiss Large Cap Fund	133	19.23	15.22	9.93	15.93	13.01	0.06
HDFC Top 100 Fund	14,376	17.49	18.20	9.80	15.78	15.34	0.06
Canara Rob Bluechip Equity Fund	122	17.66	15.34	9.60	14.20	13.35	0.07
DHFL Pramerica Large Cap Fund	400	15.80	13.81	9.55	15.85	12.24	0.05
Tata Large Cap Fund	764	15.65	13.94	9.46	14.56	12.46	0.04
BNP Paribas Large Cap Fund	869	17.18	12.96	9.39	17.11	13.71	0.02
UTI Mastershare	5,195	16.77	14.23	9.28	15.10	12.07	0.06
IDBI India Top 100 Equity Fund	398	13.63	12.86	9.24	15.66	12.94	0.00
L&T India Large Cap Fund	394	15.82	13.58	8.88	15.38	13.02	0.03
S&P BSE 200 – TRI		20.64	18.15	11.34	15.97	13.02	0.11

Returns are on a rolling basis and those depicted over 1-Yr are compounded annualised.
Data as on July 11, 2018
(Source: ACE MF)

*Please note, this table only represents the best performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme related documents carefully. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.

In terms of performance, Reliance Large Cap Fund has certainly rewarded its investors. Barring the 2 year rolling period, it has been able to beat the benchmark across time periods.

While the fund’s performance has been impressive, it has come at a higher volatility than its pure large cap peers, as well as the benchmark. Notably, the fund had a broader investment mandate, which allowed it to hold significant exposure into mid caps as well. However, with a revised mandate in place, once may hope the fund to impress on the risk front as well.

The fund will now closely compete with other popular peers like—SBI BlueChip Fund, ICICI Prudential Bluechip Fund, Aditya Birla SL Frontline Equity Fund and HDFC Top 100 Fund.

Investment Strategy of Reliance Large Cap Fund

Classified under large cap funds, Reliance Large Cap Fund is now mandated to invest predominantly in stocks of top 100 companies by full market capitalization. The fund will maintain a minimum exposure of 80% to Large Cap stocks. It may also invest upto 20% of its assets in debt and money market securities and upto 20% of AUM in REITs and InvITs.

The fund endeavors to invest in leaders or potential leaders with established business models & sustainable free cash flows. It focuses on growth companies available at a reasonable valuation & relatively better return on equity. While not much will change in terms of investment strategy, the fund will not have the freedom to choose from the wide range of higher mid cap stocks, which helped it ride the momentum and boost returns in the past.

Reliance Large Cap Fund - Portfolio Allocation and Market Capitalisation Trends

Reliance Large Cap Fund – Top Portfolio Holdings

Top 10 Stocks Stocks % of Assets State Bank Of India 8.98 HDFC Bank Ltd. 6.41 ITC Ltd. 5.15 Larsen & Toubro Ltd. 5.08 Infosys Ltd. 3.68 Axis Bank Ltd. 3.26 Indian Oil Corporation Ltd. 2.94 ICICI Bank Ltd. 2.94 Tata Steel Ltd. 2.91 Tata Motors Ltd. 2.81	Top 5 Sectors
Holdings (in %) as on June 30, 2018 (Source: ACEMF)

Banking and Finance stocks dominate Reliance Large Cap Funds portfolio, together occupying around one third of the portfolio allocation. Pharma stocks are the next top bets with an exposure of about 9%. Industrial Capital Goods and Consumption follow behind with a weightage of about 7% to 8% in the portfolio. Reliance Large Cap Fund is highly concentrated to few selected sectors, with top five sectors together accounting for 58% of its assets.

Among stocks, SBI and HDFC Bank top the list with around 9% and 6.5% exposure. ITC and Larsen & Toubro trail closely behind with an exposure of around 5% each. Infosys, Axis Bank, ICICI Bank, Tata Steel and Tata Motors are among the other index heavyweights in the funds top portfolio holdings. Currently about 90% of its assets is in stocks belonging to the S&P BSE 200 index, which together carry about 57% weightage in the index.

Though the large-cap fund has as many as 48 stocks in the portfolio, the allocation to the top holdings is fairly diversified, where the top 10 stocks account for 44% of its assets.

Suitability of Reliance Large Cap Fund

Large-cap oriented funds are better poised to handle market volatility vis-à-vis mid-and-small caps. Stable businesses, greater market share, quality of management and the sustainability prospects are factors that seem convincing to take exposure to large-caps at the current level.

Large sized companies with strong balance sheets and proven track-records could help ride the wave of short-term volatility to a certain extent. Therefore, diversified equity funds with a predominant large-cap allocation can offer stability to ones investment portfolio.

Reliance Large Cap Fund has been amongst the few large-cap funds that take opportunistic allocation to mid-caps, to generate higher alpha. However, with the revision in its investment mandate and universe the fund may go slow on its mid cap bets. It will be interesting to see, if the fund can still sustain the alpha over the benchmark in momentum driven markets.

Given the funds exposure is heavily skewed towards index heavyweights, the returns of the fund could be expected to be broadly in line with the benchmark. However, the active management and selection of weightage in the stocks may lead to margin of deviation in performance over the index.

Despite its superior performance, the higher volatility in performance has been a concern for Reliance Large Cap Fund, especially in bearish markets. One should understand his / her suitability and risk appetite, and evaluate if such funds could be an apt fit in the investment portfolio.

If you are not sure about how to align these schemes with your financial goals, do consult your financial planner or investment advisor.

Note: This write up is for information purpose and not a recommendation to buy or sell the mutual fund scheme. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor.

Editor's note: Equity markets are unpredictable and we have already seen the change in sentiment over the last few months. In such conditions, what can be your next best move to ensure decent performance of your mutual funds portfolio? Some smart investors are taking proactive steps to lock their gains and further strengthen the performance of their mutual funds portfolio. Don't be left out and regret later...

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DISCLOSURE AS PER SECURITIES AND EXCHANGE BOARD OF INDIA (RESEARCH ANALYSTS) REGULATIONS, 2014  

About the Company including business activity 

Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989. 

QIS was promoted by Mr. Ajit Dayal with an objective of providing value-based information / views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.

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Disciplinary history

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11. Rahul Goel;
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1. Neither QIS, it’s Associates, Research Analyst or his/her relative have any financial interest in the subject Company , except QIS receives fees for providing research to Quantum Equity Fund of Fund (QEFoF) which is Fund of Fund scheme managed by QMF.
2. Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report.
3. Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront /annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices

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