Learn About Mutual Fund

1. Quarterly Update January 2021
1
IDFC Large Cap Fund
(Large Cap Fund -An open-ended equity scheme predominantly investing in large cap
stocks)
The fund aims to generate relatively steady returns by investing in sector leader stocks in the chosen
sectors, predominantly in the large cap universe. The portfolio approach is based on a robust three pillar
strategy:
❖ Buying the right sectors – Identifying and investing in the right sectors with a flexibility to have
large deviation from the benchmark sector weights.
❖ Buying the sector leaders - Investing in the sector leader companies having strong fundamentals,
solid execution track record as well as resilient balance sheet to withstand any cyclical
downturns.
❖ Tactical allocation to mid/small caps – Opportunistic allocation to take advantage of any
mispriced opportunities or a benevolent risk-on environment.
The fund has a “Growth” and “Quality” oriented investment style, and focuses on companies having
strong visibility of earnings growth coupled with healthy return on capital employed.
During the quarter ended Dec-20, the fund underperformed the benchmark (S&P BSE 100 TRI) and large
cap index (Nifty 50 TRI).
% return during the quarter Dec-20
Fund 18.4%
Benchmark - S&P BSE 100 TRI 24.1%
Nifty 50 TRI 24.6%
Nifty Midcap 100 TRI 22.9%
Nifty Small cap 100 TRI 21.9%
At a sectoral level, the top positive contributors were Energy (UW), Cement / Building Materials (OW)
and Information Technology (OW). The top 3 negative contributors were Financials (UW), Commodities
(OW) and Health Care (OW).
Source: Bloomberg report for Sep-Dec’20 quarter. Contribution considers allocation as well as selection effect.
Market cap mix Fund Benchmark OW/UW
Large cap 100% 96% 4%
Mid cap 0% 4% -4%
Small cap 0% 0% 0%
Cash 0% 0%
Top 3 negative contributors Sector OW/UW
Financials Underweight
Commodities Overweight
Health Care Overweight
Top 3 positive contributors Sector OW/UW
Energy Underweight
Cement / Building Mat Overweight
Information Technology Overweight
Performance Update

2. Quarterly Update January 2021
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The beginning of the quarter witnessed a major news on visible progress on Covid-19 vaccine and this
led to a sharp rotation back into the reversal ideas/stocks mainly in the high beta, beaten down sectors
which so far have been laggards in the Post-Covid world. Top performing sectors during the quarter were
Realty, Metals, Banking & Finance, Capital Goods and PSUs.
The fund being defensively positioned did not have much exposure to these sectors except in Cement
sector, which is an outcome of bottom up choice. In addition to this, the only other key contributor
which boosted fund returns was exposure towards Information Technology. Existing positions in the
underweight sectors performed strongly but were not sufficient enough to match the exposure in the
benchmark in this short period.
Stocks which rose higher than the benchmark during the quarter were Bajaj Finance, ICICI Bank, SBI,
HDFC, L&T, Asian Paints, HDFC Bank, Ultratech, Titan, Divis, Infosys, Avenue Supermart & Tech
Mahindra.
Fund has been defensively positioned throughout CY2020. While this helped the fund preforming
strongly during the first 3 quarters, the current quarter saw some slip, led by a very strong reversal in
the cyclical stocks, post the vaccine news. A large overweight position in Health Care and a large
underweight position in Financials impacted the relative performance for the quarter.
Some of the stocks which gave negative to negligible returns during the quarter were Reliance Industries,
Fine Organics, Britannia Industries, IPCA Labs & Dr. Reddy’s Labs.
Sep-20
Sector/Weight Fund Benchmark OW/UW Fund
Telecommunication Services 7.2% 2.1% 5.2% 7.0% 0.2%
Information Technology 19.7% 14.6% 5.1% 16.3% 3.4%
Consumer Staples 11.7% 9.6% 2.1% 10.2% 1.5%
Health Care 6.1% 4.7% 1.4% 11.5% -5.4%
Auto 6.9% 5.9% 1.0% 10.9% -4.0%
Cement / Building Mat 3.0% 2.2% 0.8% 3.4% -0.4%
Industrials 2.4% 3.6% -1.1% 2.0% 0.4%
Consumer Discretionary 3.9% 5.2% -1.4% 4.1% -0.3%
Energy 8.5% 10.7% -2.3% 9.0% -0.5%
Utilities 0.0% 2.9% -2.9% 0.0% 0.0%
Commodities 0.0% 3.2% -3.2% 5.1% -5.1%
Financials 30.8% 35.4% -4.6% 20.0% 10.9%
Dec-20 Change during the
Qtr
During the quarter, the fund has reduced its underweight in Financials and hence the exposure has
increased compared to previous quarter end. Some more weight has been added to an already
overweight position like Information Technology. Fund has booked profits in some of the strong
performers in sectors like Health Care & Auto.
Key changes during the quarter
What did not work
What worked

3. Quarterly Update January 2021
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Financials
Financials have seen a rollercoaster ride in the entire CY2020. While the initial fall was attributed to
moratorium led NPA concerns, the subsequent rally was fuelled by receding concern on ultimate loss
given default and abundant liquidity. The sector still is on a recovery mode, with more than normal
support given by the regulator and the government. However, the credit growth in the sector remains
feeble at mid-single digit. Even if the asset quality stress may recede at the margin, revenue growth is
contingent on the revival of the broader economy. In this context, we have now added some exposure
towards recovery-oriented ideas, though over-all we continue to be underweight. The progress still
needs to be monitored closely, as the sector remains a large weight in the benchmark and is highly liquid
as well.
Information Technology
Cyclically, the momentum remains strong for Tech services going into FY22E, led by increasing demand
for Cloud/SaaS solutions in the key industry verticals (Banking/ Retail/ Technology). Key enabler is scaling
up of digital projects with the modernization of IT stacks as software, middleware, database and IT
hardware. In addition, the need to reduce costs is leading to pick-up in outsourcing and potentially
offshoring to low cost locations, with Work From Anywhere (WFA) becoming accepted norm potentially
even after the pandemic. With the most efficient supply chains having significant cost differential and
large digital talent pool Indian IT services companies are positioned favourably.
Telecom
Going into 2021, sector revenues should grow again after growing 20% in 2020. This is likely to be led by
tariff hikes and rising 4G data adoption. Secondly, after the adverse AGR (Adjusted Gross Revenue) case
verdict in 2020, there could be a potential review of AGR dues led by incumbents’ petitions. Thirdly,
2021 would be decisive for digital services and for big players having varied models of own apps/content
vs partnerships to boost subscribers and ARPU (Average Revenue Per User). We believe the sector is at
reasonable valuations and likely to witness accelerated revenue and profitability growth, and hence is
positioned attractively.
Portfolio Metrics Fund Benchmark Commentary
PB Ratio 3.9 3.1
P/B ratio appears higher due to exposure to the
private sector Financials & Consumer Staples
Source: Bloomberg, Based on trailing 12 months data
The fund has been delivering outperformance over then benchmark on a one-year basis for most part
of CY2020. A large part of this performance has emerged from a better stock selection. Our investment
approach has been driven by the three pillar strategy of having exposure to the right sectors, buying
sector leaders and taking some tactical benefit of Mid/Small caps.
Fund – Key metrics
Portfolio stance – Key sectors
Fund Manager Commentary

4. Quarterly Update January 2021
4
Fund’s defensive position helped in preventing the drawdowns in the early part of this calendar year.
However, world over markets have seen a rotation back to the cyclical trade which is concentrated into
beaten down, high beta names and sectors. While this impacted the relative performance in the short
term, it has come as a surprise to many market participants, given that the actual levels of activity remain
below the pre-Covid levels on most parameters. Market seems to be reacting more to the delta in the
activity than the activity itself. This coupled with abundant liquidity and a generally risk on sentiment
has led to exuberance, which now has engulfed the Mid & Small cap segment as well.
Faster than expected pickup in aggregate demand going ahead could make it a consensus buy for both
FPIs and DIIs thereby further fuelling the bull market rally. However, currently, the drivers of near-term
aggregate demand remain weak in the form of household spending driven by weak consumer sentiment,
fiscal constraints on government spending, and corporates cutting back on capex and opex.
Going onto 2021, we have made some tweaks to the portfolio to start building moderate exposure to
recovery-oriented names gradually. In addition, we have used this strong rally to book profits in the
Mid/Small cap segment. Our approach would be to monitor the economic revival closely and stick to a
more fundamental led portfolio rather than “flows”.
The fund has a relatively higher tilt towards stable sector vs the benchmark. Also, the current portfolio
now comprises of 100% large cap stocks vs 96% for the benchmark.
Stable Sectors: Retail Banks & NBFC’s, IT, Consumer Staples & Discretionary, Auto, HealthCare
Cyclical Sectors: Corp Banks & NBFC’s, Energy & Utilities, Industrials, Cement, Commodities, Telecom
Benchmark Stable Cyclical Total
Large Cap 61% 35% 96%
Mid Cap 2% 2% 4%
Small Cap 0% 0% 0%
Total 63% 37%
Fund Stable Cyclical Total
Large Cap 65% 35% 100%
Mid Cap 0% 0% 0%
Small Cap 0% 0% 0%
Total 65% 35%
Fund positioning – Stable & Cyclical Framework

5. Quarterly Update January 2021
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Cyclical & Stable Exposure with Top 3 Stocks in each sector
Banks - Corp 12.1% 9.4% Banks - Retail 8.6% 13.3%
ICICI BANK 6.1% 5.3% HDFC BANK 8.6% 8.4%
STATE BANK IND 3.0% 1.5%
AXIS BANK 3.0% 2.3%
Energy 8.5% 10.7% Information Technology 19.7% 14.6%
RELIANCE INDUSTRIES 8.5% 9.2% INFOSYS 8.4% 6.6%
TATA CONSULTANCY 5.3% 4.3%
HCL TECHNOLOGIES 2.5% 1.5%
Industrials 2.4% 3.6% NBFC - Stable 10.1% 11.8%
LARSEN & TOUBRO 2.4% 2.2% HDFC 6.8% 6.6%
BAJAJ FINANCE 2.3% 2.0%
MUTHOOT FINANCE 1.0% 0.0%
Cement / Building Mat 3.0% 2.2% Consumer Staples 11.7% 9.6%
ULTRATECH CEMENT 3.0% 0.9% HINDUSTAN UNILEVER 3.1% 3.1%
ITC 2.6% 2.6%
BRITANNIA INDUSTRIES 1.0% 0.6%
Telecom. Services 7.2% 2.1% Auto 6.9% 5.9%
BHARTI AIRTEL 7.2% 1.8% MAHINDRA & MAHINDRA 2.1% 1.0%
MARUTI SUZUKI 1.9% 1.5%
BAJAJ AUTO 1.5% 0.6%
Health Care 6.1% 4.7%
DIVIS LABS 1.7% 0.7%
DR REDDY'S LABS 1.7% 0.9%
AUROBINDO PHARMA 1.7% 0.4%
Consumer Discretionary 3.9% 5.2%
ASIAN PAINTS 1.8% 1.8%
TITAN 1.1% 0.9%
AVENUE SUPERMART 1.0% 0.6%
The sectors / stocks mentioned herein should not be construed as an investment advice from IDFC Mutual Fund and IDFC
Mutual Fund may or may not have any future position in these sectors / stocks.
All data as on 31st December 2020
Fund Performance
Performance based on NAV as on 31/12/2020. Past performance may or may not be sustained in future. The performances given are of regular plan growth
option. Regular and Direct Plans have different expense structure. Direct Plan shall have a lower expense ratio excluding distribution expenses, commission
expenses etc. #Benchmark Returns ##Alternate Benchmark Returns. The fund has been repositioned from an IPO fund to a large cap fund w.e.f. April 18,
2017. Current Index performance adjusted for the period from since inception to June 28, 2007 with the performance of S&P BSE 100 price return index
(Benchmark). The Fund Manager of the fund is Mr. Sumit Agrawal & Mr. Arpit Kapoor (w.e.f. 1st March 2017).
Cyclical Stable

6. Quarterly Update January 2021
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Other Funds managed by the Fund Manager
Performance based on NAV as on 31/12/2020. Past Performance may or may not be sustained in future. The performance details provided herein are of
regular plan growth option. Regular and Direct Plans have different expense structure. Direct Plan shall have a lower expense ratio excluding distribution
expenses, commission expenses etc. 2The fund has been repositioned from an IPO fund to a large cap fund w.e.f. April 18, 2017. §Current Index performance
adjusted for the period from since inception to June 28, 2007 with the performance of S&P BSE 100 price return index (Benchmark). 5The fund has been
repositioned w.e.f. May 28, 2018 and since will invest only in the schemes of IDFC Mutual Funds. ^Current Index performance adjusted for the period from
since inception to May 28, 2018 with the performance of CRISIL Hybrid 85+15 Conservative Index (Benchmark) and CRISIL Hybrid 35+65 - Aggressive Index
(Benchmark).
IDFC Large Cap Fund
(Large Cap Fund- An open-ended equity scheme predominantly investing in large cap stocks)

7. Quarterly Update January 2021
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Disclaimer: MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
The Disclosures of opinions/in house views/strategy incorporated herein is provided solely to enhance the transparency about the investment strategy /
theme of the Scheme and should not be treated as endorsement of the views / opinions or as an investment advice. This document should not be construed
as a research report or a recommendation to buy or sell any security. This document has been prepared on the basis of information, which is already available
in publicly accessible media or developed through analysis of IDFC Mutual Fund. The information/ views / opinions provided is for informative purpose only
and may have ceased to be current by the time it may reach the recipient, which should be considered before interpreting this document. The recipient
should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision and
the security may or may not continue to form part of the scheme’s portfolio in future. Investors are advised to consult their own investment advisor before
making any investment decision in light of their risk appetite, investment goals and horizon. The decision of the Investment Manager may not always be
profitable; as such decisions are based on the prevailing market conditions and the understanding of the Investment Manager. Actual market movements
may vary from the anticipated trends. This information is subject to change without any prior notice. The Company reserves the right to make modifications
and alterations to this statement as may be required from time to time. Neither IDFC Mutual Fund / IDFC AMC Trustee Co. Ltd./ IDFC Asset Management
Co. Ltd nor IDFC, its Directors or representatives shall be liable for any damages whether direct or indirect, incidental, punitive special or consequential
including lost revenue or lost profits that may arise from or in connection with the use of the information.