'We have benefitted a lot from public sector stocks'

While most active large-cap funds struggle to outperform their benchmark, the Nippon India Large Cap Fund stands tall, consistently surpassing its index since the last four years (on a calendar-year basis). Explaining the reasons behind the fund's success, Sailesh Raj Bhan, CIO - Equity Investments at Nippon India Mutual Fund, attributed it to "avoiding excessive risks" and focusing on sectors that gave "meaningful returns and outperformed the benchmark". Currently, Bhan manages assets of nearly Rs 83,000 crore across three funds, including the Nippon India Large Cap Fund and Nippon India Multi Cap Fund, which are both rated five stars by Value Research. In this interview, Bhan discusses the investment principles driving the large-cap fund's steady outperformance. He also shares his take on the ongoing market volatility, the complementary roles of active and passive funds and views on emerging investment themes. The Nippon India Large Cap Fund has a reputation for consistency. What's the secret behind staying ahead when the benchmarks loom so large? The markets have been kind, and that's one advantage we've had. We have also consistently strived to avoid taking excessive risks, as we aim to buy growth companies at fair prices. We allocate a significant portion of our portfolio to this area, maintaining constant attention to valuation and quality. So, combining these factors has helped us to achieve a visible outcome. This fund has been around for roughly 17-18 years, and we have been running it in a similar large-cap fashion. We've always found that markets will have extreme phases in the interim. Still, if you follow the GARP framework, avoid overpaying for growth and take the right risks, these principles have allowed us to take advantage of the opportunities. Another intriguing thing is that there are a lot of narratives in large caps where people say there is no large-cap alpha. I think alpha is a measure of how the fund manager is positioning the portfolio versus the benchmark. When we put a lot of research into the investments we make, the probability of taking a stand versus the market and the outcomes of that probability move up, driven by strong research. So, I think there's alpha everywhere; it's about the ability to take a stand, and it doesn't co