Fund of Fortnight

This is our mutual fund recommendation. Every fortnight , we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same

Edelweiss Large & Mid Cap Fund - Direct Plan

Reason for recommendation
Volatility in the equity market has increased over the past few months. Frontline indices after touching a high of 18,600 crashed more than 2,000 points to 16,400 only to recover partially. There are concerns such as stretched valuation, sucking of liquidity from the system and higher inflation which will keep the equity market in check. Hence, it makes sense to invest in a fund that can give you better downward protection without comprising on potential gains. Edelweiss Large and Mid-Cap is one such fund that has proved its mettle. For the quarter ending March 2020 when its benchmark fell by 28.88 per cent and its category by 26.73 per cent, the fund saw a drop of 24.32 per cent in its NAV. Last year, when the equity market generated better returns, the fund was able to beat its benchmark and matched the returns provided by its peers. One of the reasons for such a perfor- mance is on account of its bias towards large-caps. It was earlier a large-cap-oriented fund, which was later repositioned as a large and mid-cap fund. It continues to have a large-cap tilt with mid-cap exposure closer to the bare minimum expected. At the end of November 2021, the fund held 70 per cent of its corpus in large-cap-dedicated stocks with the rest in mid-cap and small-cap stocks.

Besides, the investment strategy of the fund manager is to prefer quality businesses and avoid companies with low earning visibility or weak management. This fund is well-diver- sified with 62 stocks. Its top 10 stocks share 36 per cent of the net assets, thereby reducing the concentration risk. Its portfolio contains industry leaders like Infosys and ICICI Bank. Even in terms of sectoral allocation, compared to its category, it is overweight on technology, construction and FMCG. The fund is suited for an investor who can take moderate risk with an investment horizon of one to three years.