Large-cap PMS strategies stood out in September 2024, delivering an impressive average return of 2.18%, outperforming other segments

Large-cap Portfolio Management Services (PMS) strategies stood out in September 2024, delivering an impressive average return of 2.18%, outperforming other segments such as Small & Midcap (1.72%), Multicap (1.32%), and Thematic (1.86%) strategies. With a concentrated focus on a single market capitalisation band, large-cap PMSes managed to beat broader expectations.

Market Overview

September 2024 was a volatile month for Indian markets. The Nifty 50 surpassed the 26,000 mark for the first time, peaking at 26,277 before closing +2.28% MoM at 25,811. Large-cap PMSes leveraged this strong performance, benefitting from favourable market breadth and sectoral gains in Metals (+8%), Utilities (+5%), and Real Estate (+4%). This, combined with positive macroeconomic indicators like controlled inflation and stable interest rates, helped large-cap stocks lead the charge, particularly in a market that has shown consistent strength throughout the year.

Top Performers in Large-Cap PMS

The performance of large-cap PMSes in September was driven by strong stock selection and effective sectoral allocation. Notably, 62.5% of large-cap PMS strategies outperformed the Nifty 50, with 15 out of 24 strategies delivering alpha.

Standout performers were Marcellus’ Consistent Compounders (up 4.5%), closely followed by Standard Chartered’s Long Term Value Compounder (up 4.42%), iThought’s TRUBLU (up 4.15%), Right Horizons’ India Business Leader (up 3.47%) and Accuracap’s Alpha10 (up 3.27%).

Here are the top ten performers for the month

Analysis of Key Drivers

Large cap PMS strategies in September benefitted from both strong sectoral performance and tactical portfolio adjustments by fund managers. The Nifty 50 TRI returned 2.28%, while large-cap PMSes averaged 2.18%, indicating that skilled fund managers were able to generate alpha over benchmark indices. The consistency of returns in large-cap PMS strategies can be attributed to a disciplined approach to stock selection, focusing on long-term compounders and established market leaders.

The strong gains in sectors like Metals, which rallied +8%, and Financials (+4%), were crucial for large-cap funds. Moreover, volatility during the month presented buying opportunities, which many fund managers used to their advantage. For instance, Marcellus Investment Managers’ Consistent Compounders strategy, which returned 4.50%, focuses on resilient businesses with strong pricing power—an edge in a fluctuating market.

Outlook

September 2024 marked a month where large-cap PMS strategies outperformed their peers. As the Nifty reached new highs, fund managers’ focus on quality large-cap stocks with robust fundamentals paid off. 

While small and mid caps have surged more in the last 12 months, gaining 48% and 50%, respectively, compared to large-caps’ 31%, September showed that large-caps can still hold their own during periods of market volatility.

Looking ahead, the premium valuations of Indian equities, supported by stable political and macroeconomic factors, suggest that large-cap PMS strategies remain well-positioned. With the Nifty trading at 21.5x one-year forward earnings, the market may be expensive, but the robust earnings growth, GDP projections, and supportive macro conditions indicate a positive outlook for the coming months. That said, it is better to consult a financial advisor before investing in any PMS investment approaches.