Bajaj Finserv’s decision to launch a large cap NFO now underlines its stated commitment to drive fund launch decisions from an investment opportunity angle and not a sales angle – which explains a fund launch in a category that’s currently witnessing very muted inflows.
Large caps are relatively attractive on valuations compared to mid and small caps.
The new fund will be concentrated (25-30 stocks) as well as high on active share (upwards of 60%) – both of which Sorbh believes will enable it to deliver sustainable alpha over time in a segment which many believe is more suitable for passive funds due to paucity of long term alpha.
He is very selective on banks and NBFCs and will not be overweight financials right now. Insurance is one bright spot he sees in the financials space.
IT – the other index heavyweight also is not on his favourites list – he is yet to be convinced about a sustainable turnaround in business momentum in this sector.
Among industrials, he prefers companies that rely more on private sector capex and exports rather than Government orders as the pace of growth in Government infra spending is reducing though rising in absolute terms.
He likes rural focused consumer discretionary businesses, consumer staples and pharma sectors.