The investment objective of the scheme is to generate long-term capital appreciation by predominantly investing in equity and equity-related instruments of large-cap companies.

Investment strategy

The scheme will follow an active investment strategy that adopts a systematic approach to stock selection and portfolio construction. The approach allows the fund manager to respond proactively to changing market conditions and emerging opportunities.

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Why should one invest in the JioBlackRock Large Cap Fund?

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According to the fund house, the fund combines human insight and the power of technologies like AI and machine learning to identify strong large-cap companies and manage risk in a structured manner, using India-specific Signals research scores (Systematic Active Equity) provided by BlackRock group entities.

The fund focuses on investing in largecap companies by following a disciplined framework and defined risk management processes. It is structured to provide exposure to established market leaders within the largecap segment. Lastly, it is delivered at a relatively low price with no exit load.

What experts say about the fund

Experts typically advise investors to avoid investing in NFOs unless they offer something unique. The uniqueness could be that the scheme offers an investment option not available in the market or offers something extra to an existing option. Otherwise, experts believe investors are better off with an existing scheme that has a long performance record. This is because you have historical data to base your investment decision on. You don’t have any data when it comes to new offerings.

Bharath Rathore, Executive Director, Anand Rathi Wealth Limited shared with ETMutualFunds that today, there are 36 large-cap funds in the mutual fund universe and in the last year, around 5 funds were launched in this category. The JioBlackRock Large Cap Fund is one of them, with the only differentiating factor stated as the use of global research and technology.

However, fund management cannot be conducted only through a tech lens, it requires strong fund manager conviction to navigate the nuances in the equity market. Hence, investors who wish to opt for this fund should adopt a wait-and-watch approach for about a year to understand the performance over the long term, Rathore further said.

Another expert, Nilesh D Naik, Head of Investment Products, Share.Market told ETMutualFunds that in terms of the investment universe, the category is quite standardized, requiring the fund to allocate at least 80% of the portfolio to large-cap stocks (i.e., the top 100 companies by market capitalization).

However, the research and portfolio construction process may vary across AMCs. In the case of Jio BlackRock, they follow their proprietary Systematic Active Equity (SAE) investment approach, Naik said.

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Investment allocation and risk

JioBlackRock Large Cap Fund will allocate 80-100% in equity and equity-related instruments of largecap companies. 0-20% will be allocated in equity and equity-related instruments of companies other than largecap companies, 0-20% in debt and money market instruments, and 0-10% in units issued by InvITs.

The principal invested in the fund will be at “very high risk” according to the scheme’s riskometer.

The performance of this largecap fund will be benchmarked against the BSE 100 Index (TRI) and will be managed by Tanvi Kacheria and Sahil Chaudhary.

Why large caps now?

According to a post by fund house on social media platform X, Rishi Kohli, CIO of JioBlackRock Mutual Fund said, “I think it’s a great time to be in large caps, in fact, for two reasons. One is geopolitical uncertainty. Now typically around this period is when, you know, if you have to allocate then large caps because of being steadier, less risky, less volatile, it becomes a good time, you know, to invest in these.”

Kohli further added, “And secondly, of course, if you look at a lot of metrics like large cap versus mid cap or large cap versus small cap ratio, we obviously have Nifty 500 as our benchmark for a lot of the other active schemes. So we look at something like, let’s say Nifty 100 to Nifty 500 ratio, then those are almost at the lows of the last 10-12 years. And typically around when they are at such lows, then they will tend to recover compared to the rest of the market.”

Time to focus on large cap funds now?

The experts cautioned investors against investing in NFOs since there are many existing funds in the same category that have exposure to large caps.

Naik said that given the recent market fall and volatile environment, it does make sense to invest in the large-cap space, either through dedicated large-cap funds or funds with reasonably large exposure to this segment of the market.

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Rathore said investors should maintain their long-term investment strategy across diversified equity funds through all market cycles, including the current volatility. If they wish for further large-cap exposure in their portfolio, they can do this through other categories such as flexi cap, focused funds, and dividend yield funds, which have around 60-65% average exposure in large caps.

How did funds in the large-cap basket perform?

Around 27 large cap funds have been around in the industry for over five years. Out of these 27 funds, Nippon India Large Cap Fund delivered the highest return in the last five years of around 14.98%, followed by ICICI Prudential Large Cap Fund which posted a return of 13.08%.

PGIM India Large Cap Fund gave a 7.13% return in the last five years, followed by Axis Large Cap Fund, which gave the lowest return in the last five years at around 6.79%.

After seeing the historical performance of large-cap funds, Rathore said that investors may opt for either a lump sum or SIP based on fund availability. If funds are available, they can go ahead with a lump sum investment and stagger it across 6-8 weeks in tranches to better ride the volatility.

While strongly recommending investment through the SIP route, especially in a volatile environment, Naik said that investors with large sums of money to deploy could opt for a Systematic Transfer Plan (STP) which allows them to invest first in a relatively low-risk product and then systematically transfer money into equity funds over a period, such as 6–12 months. Ultimately, allocation should be aligned with one’s risk appetite.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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