VR Logo

Fidelity Equity - Large-cap Aided Consistency

This fund rewards investors who stay invested in it for the long run

Though the fund’s investment mandate is one of a “go-anywhere” kind in terms of market cap and sector allocations, in practicality it sticks to a large-cap orientation. Ever since launch, Kothari has allocated over 65 per cent to the same. Among sector plays, his preference for Banking is obvious.

The fund’s popularity shot up after its performance in 2008 when it was among the few that managed to contain downsides despite being fully invested. The large-cap bias that came to its aid proved to be the chink in its armour when the market began rallying in March 2009 and mid- and small-cap stocks galloped ahead. Such market movements do not hinder Kothari’s individual style. “The investment process does not start with a market cap bias,” explains Kothari. “While looking at various investment options I keep the liquidity risk in mind. While I do not bucket investments in mid or large cap, if I get 30 per cent returns without taking liquidity risk and a mid cap offers 40 per cent return I would opt for the larger cap company.”

You will never find Kothari succumbing to the herd mentality. He has been known to invest in stocks that are less popular among his peers and hold on to them for the long term. For instance, Whirlpool India came into the portfolio in September 2007 and still features (and has rewarded him handsomely). “Understanding how the business makes money, what is the scalability of the business, what is the management’s track record and execution capability and the value we should pay for such business are the key elements of my investment process,” he says.

Our View
The fund’s no-nonsense, disciplined approach rewards investors who hang on. The very average performances during the heady days of a bull run may disappoint, but its long-term returns put it ahead of the category average. What you can expect is a diversified portfolio, low individual stock bets and no undue risks with a clear focus on bottom-up stock picking and comfort in valuations.