Is Bandhan Large & Mid Cap Fund the Next Big Turnaround Story?

In the world of mutual funds, a change in leadership often brings a change in fortune.

Bandhan Small Cap Fund has been a stellar performer over the last three years. A significant reason for this success is attributed to the fund manager, Mr Manish Gunwani. Now, under his leadership, another fund from the same house is showing signs of a strong turnaround: the Bandhan Large & Mid Cap Fund.

Based on 3-year and 5-year returns, the fund has become a top performer in its category. Even rolling returns, which measure consistency, show a clear improvement.

So, what exactly is working for this fund? Let’s dive deep into the strategy and the data.

1. The "Winning Formula": Borrowing from Small Caps

The fund manager seems to be applying the same successful strategy used in the Small Cap fund to the Large & Mid Cap fund.

The Rule:
By regulation, a Large & Mid Cap fund must invest:

• Minimum 35% in Large Cap stocks.
• Minimum 35% in Mid Cap stocks.
• The remaining 30% can be invested anywhere.

The Strategy:
Instead of playing it safe, Mr Gunwani is utilising that flexible 30% to invest heavily in Small Caps.

Let's look at the data from the images to compare the two funds:

Image 1: Bandhan Small Cap Fund Allocation

• Small Cap: 72.00%
• Large Cap: 9.92%
• Cash: 9.73%

Image 2: Bandhan Large & Mid Cap Fund Allocation

• Large Cap: 41.47%
• Mid Cap: 35.87%
• Small Cap: 18.76%

Observation: The Large & Mid Cap fund has nearly 19% exposure to Small Cap stocks. This is a significant allocation that helps boost returns when the broader market is rallying.

2. Wide Diversification (Spreading the Risk)

Another key strategy is how the portfolio is constructed. Just like the Small Cap fund, the Large & Mid Cap fund believes in spreading its bets wide.

• Stock Count: At the end of 2025, the fund held more than 100 stocks.
• Weightage: More than 80 of these stocks had a weight of less than 1% each.

Why does this matter?
This approach helps the fund capture growth opportunities across many companies while managing risk. If one or two small stocks fail, it doesn't hurt the overall portfolio significantly because their weight is less than 1%.

3. Active Management: Not Just "Buy and Hold"

Mr Gunwani does not strictly follow the traditional "buy and hold" approach. Instead, he actively adjusts the portfolio based on changing market conditions (Macro trends).

The IT Sector Example:

• Past View: Last year, the fund manager was cautious about growth in the US, so he kept the exposure to the IT sector low.
• Current View: As the outlook improved, he increased the IT exposure.
• The Data: Currently, the fund's IT exposure is close to 8%, whereas the category average is only around 5%.

Sector Allocation Check (From Image):
Looking at the Sector Allocation table provided:

• Realty: The fund is heavily overweight (9.0% vs Index 1.9%).
• Financial Services: This is the largest holding at 25.2%.
• Textiles & Consumer Services: The fund is overweight in these sectors compared to the index.

This shows that the fund manager is taking active calls, betting more on sectors he believes will outperform (like Realty and Finance) and less on others.

Conclusion

The turnaround in Bandhan Large and Mid Cap Fund seems to be driven by a three-part strategy:

1. High Small Cap Allocation: Using the flexible portion of the fund to boost growth.
2. High Diversification: Holding many stocks with low individual weights to reduce risk.
3. Active Sector Rotation: Moving money into sectors (like IT or Realty) based on current market trends rather than just holding them passively.

For investors, this fund offers a mix of stability from large caps and the aggressive growth potential of small caps, managed by a team with a proven track record.

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