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L&T Midcap Fund: Stellar Performer
Sun, Aug 20, 2017
Source : Yash Jashnani, Citrus Interactive

L&T Midcap Fund is an open ended diversified equity fund. The investment objective of the scheme is to generate capital appreciation by investing primarily in midcap stocks. The scheme will invest primarily in companies whose market capitalization falls between the highest and the lowest constituent of the Nifty Free Float Midcap 100 Index. The fund has an AUM of Rs 1,078 crore as on July 2017 which has increased by Rs 585 crore compared to last year July 2016.


Performance

The fund’s performance across various time horizons is extremely good as seen in the table given below. It has beaten its benchmark in all time periods mentioned in the table below. It has done better than the category average too in all the time periods. It is noteworthy to see it has ranked among the top 10 funds in all the time periods.

 

Scheme Name

YTD

6 Months

1 Year

3 Years

5 Years

Since Inception

L&T Midcap Fund 

35.55

26.98

36.93

26.99

29.29

22.17

Nifty Free Float Midcap 100

29.01

20.12

25.33

19.52

20.88

17.79

Category Average

25.7

18.75

20.83

16.61

20.47

N.A.

Rank

5/155

4/146

3/155

7/146

8/138

N.A.

Figures are in % as on 31st July 2017; Returns above 1 year in Compounded Annual Growth Rate (CAGR)

In terms of calendar year returns the fund has beaten its benchmark in each of the last 5 years except 2012. The fund has beaten its category average in all time periods.

Scheme Name

2012

2013

2014

2015

2016

L&T Midcap Fund 

38.13

5.59

81.61

10.77

9.79

Nifty Free Float Midcap 100

39.16

-5.1

55.91

6.46

7.13

Category Average

33.94

5.16

54.32

3.61

4.63

Rank

38/135

72/138

14/141

19/149

25/155

All figures in %

Risk: In terms of measures of risk such as standard deviation the fund has taken higher risk compared to the category median and in terms of beta (measured over the last 3 years), the fund has taken lower risk compared to the category median.

 

Standard Deviation

Beta

L&T Midcap Fund 

0.92

0.84

Category Median

0.89

0.93

Risk-Adjusted Return: In terms of risk-adjusted return measures such as Treynor and Sharpe ratio (measured over the last 3 years), the fund has provided higher risk-adjusted returns than the category median.


 

Treynor

Sharpe

L&T Midcap Fund 

0.11

0.11

Category Median

0.06

0.06


Portfolio

Sector concentration: The fund’s concentration in the top 3, 5 and 10 sectors is lower than the category median.

 

Top 3

Top 5

Top 10

L&T Midcap Fund 

17.88

27.4

42.93

Category Median

32.63

43.94

63.7

Company concentration: The fund’s Concentration in the top 3, 5 and 10 companies is lower than the category median.

 

Top 3

Top 5

Top 10

L&T Midcap Fund 

9.35

13.93

23.73

Category Median

16.6

24.71

40.99


Number of Equity Holdings: The Fund currently holds 70 stocks in its portfolio (31st July 2017), which is higher than the median stock count of the Equity Diversified category, which currently stands at 47. In the last 5 years the equity holding averages to 63.

Stock count, sector concentration and company concentration shows that the fund maintains a fairly diversified portfolio.

Cash Equivalent:        

Its cash equivalent for July 2017 is 5.5%. The average cash allocation for the last five years is 6.03%. Its maximum allocation to cash over the last two years is 14.21% in May 2017 and lowest was 2.17% in September 2016.

Portfolio Characteristics:

The top 5 sectors include Bank – Private, Chemicals, Construction – Real Estate, Cement & Construction and Engineering – Industrial Equipments.

In the last 6 months the fund bought ABB India Ltd., Aksharchem (India) Ltd., Akzo Nobel India Ltd., AU Small Finance Bank Ltd., Brigade Enterprises Ltd., Carbogen Amcis (India) Ltd., CRISIL Ltd., Deepak Nitrite Ltd., EIH Ltd., Exide Industries Ltd., Godrej Industries Ltd., Godrej Properties Ltd., Idea Cellular Ltd., ISGEC Heavy Engineering Ltd., Jindal Steel & Power Ltd., Mirza International Ltd., Oberoi Realty Ltd., Oracle Financial Services Software Ltd., Petronet LNG Ltd., Sobha Ltd., Sunteck Realty Ltd. and Union Bank Of India.

Stocks of Astra Microwave Products Ltd., Balrampur Chini Mills Ltd., Dishman Carbogen Amcis Ltd., Dwarikesh Sugar Industries  Ltd., Finolex Industries Ltd., Ipca Laboratories Ltd., Johnson Controls - Hitachi Air Conditioning India Ltd., Jyothy Laboratories Ltd., Manappuram Finance Ltd., Mangalam Cement Ltd., Mindtree Ltd., NCC Ltd., PNC Infratech Ltd, Procter & Gamble Hygiene & Health Care Ltd., Sheela Foam Ltd., Star Ferro and Cement Ltd., Thyrocare Technologies Ltd., Triveni Engineering & Industries Ltd. and Welspun India Ltd. have been dropped from its portfolio in the last 6 months.

Also stocks of NMDC Ltd., Shankara Building Products Ltd. and State Bank of India were bought and sold in the last 6 months.

Process

The investment strategy of the scheme would be to primarily invest in midcap equity and equity related instruments. The scheme would invest in a universe of stocks, which has been arrived at using various filters like management quality, liquidity, competitive position and valuation. The strategy will be used to build up a diversified portfolio of quality stocks, with medium to long term potential.

The scheme is benchmarked against Nifty Free Float Midcap 100 index. The scheme proposes to invest 80% of its corpus in equity and equity related instruments. However, upon defensive consideration, the allocation could be reduced below 80% and correspondingly in debt and money market instruments would be increased.

The overall portfolio structuring would aim at controlling risk at moderate level. Security specific risk would be minimized by investing in those companies that have been thoroughly researched in house. Risk will also be managed through broad diversification of the portfolio within the framework of the scheme’s investment objective and policies.

The fund would invest 80% - 100% in equity and equity related instruments. The fund would also invest 0% - 20% in Debt, Securitized Debt & Money Market instruments including cash/call money.

 

Fund Manager

Soumendra Nath Lahiri

Mr. Soumendra Nath Lahiri has been the Head of Equities at L&T Investment Management Limited since September 2012 and also serves as its Fund Manager. He serves as Head of Equities and Fund Manager of various L&T Mutual Funds.

He served as a Senior Vice President at L&T Investment Management Limited from September 17, 2012 till November 24, 2012. Previously he served as the Head of Equities and a Fund Manager at Canara Robeco Asset Management Company Ltd. from April 2011 to September 2012. He served as the Head of Equities and Fund Manager of various Canara Robeco Mutual Funds.

Mr. Lahiri served as the Chief Investment Officer of PMS Equity Investment at Emkay Investment Managers Ltd. from January 2011 to March 2011. He served as the Chief Investment Officer of Emkay Global Financial Services Limited. He served as Head of Equities of Dolat Investments Limited from September 1995 to May 2004. He served as the Chief Investment Officer of Advisory Services at Fortuna Capital from May 2008 to December 2010.

Mr. Lahiri was the Co-Head of Equities at DSP Merill Lynch Investment Managers Private Limited from June 2004 to March 2008. Mr. Lahiri served as a Co-Head of Equities at DSP BlackRock Investment Managers Ltd. The other schemes managed by Mr. Lahiri are L&T Midcap Fund, L&T Equity Fund, L&T India Special Situations Fund, L&T Infrastructure Fund.

He holds a P.G.D.M. in Finance and Marketing from IIM Bangalore. Mr. Lahiri also holds a B.E. degree in Mechanical Engineering.

Our View

We like L&T Midcap fund because of strong performance, a fund manager with a good track record and a well diversified portfolio. It is appropriate for the mid cap allocation in your portfolio.

 
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