Investors should have a 7-10 year investment horizon and be prepared to ride out short term volatility.
About the Scheme
L&T Midcap Fund was launched on August 09, 2004. The AUM of the scheme as on 31st October 2018 is Rs 3196.69 crore. To primary objective of the fund is to generate capital appreciation by investing majorly in midcap stocks.
Soumendra Nath Lahiri is the CIO of the Investment Management business at L&T Financial Consultants Ltd. Lahiri has over 17 year experience in Indian equity markets. He serves as Fund Manager at L&T Mutual Fund - L&T Midcap Fund.
Being a fund manager, he is heading equities at L&T Investment Management Limited since 2012. Currently, he is managing eight funds which are L&T Equity Fund, L&T Large and Midcap Fund (Formerly known as L&T India Special Situations Fund), L&T Tax Advantage Fund, L&T Dynamic Equity Fund (Equity Component, L&T Infrastructure Fund, L&T Hybrid Equity Fund (Formerly known as L&T India Prudence Fund), L&T Emerging Businesses Fund and co-managing the L&T Midcap Fund with Karan Desai has also joined him on Feb 2, 2017, for managing the investments in foreign securities for the following fund.
Kaustubh Belapurkar, Director Manager Research, Morningstar Investment Adviser India told Moneycontrol that L&T Mid-cap is a well-managed mid-cap strategy. The fund manager tends to favour mid-cap growth companies and builds a well-diversified portfolio of 70-80 stocks to reduce overall portfolio risk. He follows a benchmark agnostic style focusing on investing in companies that are efficient allocators of capital. “Lahiri tends to pay a lot of attention on the profitability and attractiveness of a business and its competitive position within its industry. He currently has an overweight in Basic Materials, Industrials, Technology & Healthcare stocks,” Belapurkar said.
Compared to other schemes, L&T Midcap fund has performed well compared to other schemes with their benchmarks, respectively. The fund has a stellar performance track record across market cycles.
Portfolio composition in present scenario
The fund is classified as highly risky, investors should take long term horizon while planning to make investments.
However, investors should know that the AUM size of the scheme is not so big but as the fund is performing well riding out the volatility, it may soon reach to Rs 5000 Cr benchmark soon. The top overweight sectors in the fund are Banking/Finance and Engineering and it is underweight on Retail and Real Estate. The major exclusions from the fund are utilities and telecom sectors.
Abhinav Angirish, Founder, InvestOnline.in said that the portfolio of L&T Midcap Fund is really good & well diversified according to the current market conditions. The scheme has increased the allocation in the finance sector and energy sector. “Both of which are holding great opportunities for future growth and are expected to help the scheme in generating great long-term returns,” he said.
Currently, the fund is allocating 11% of the total corpus to large cap funds, 79% to mid-cap funds, and 10% to small cap.
=| Performance of L&T Midcap FundPast performance may or may not be sustained in future.
Benchmark: Nifty Midcap 100 Index
=| Performance of other schemes
*Returns as on 31st October 2018
Past performance may or may not be sustained in future.
Benchmark: - S&P BSE 200 TRI Returns for L&T Tax Advantage Fund and S&P BSE SENSEX TRI Returns for L&T Infrastructure Fund
=| Peer comparison
=| Growth in invested amount
The current value of an investment of Rs 10000 in the scheme Vs Benchmark (as on 31st October 2018)
Should you invest now?
The fund tends to follow a value-based approach while picking up quality bets while assigning a smaller portion of its portfolio on tactical bets with faster growth potential. This allows the fund to maintain a superior risk-reward profile. Belapurkar said Mid-caps still continue to remain in the expensive zone despite a reasonable correction in 2018. That said mid-caps funds constitute great long term wealth creators. Investors who are currently under-allocated towards mid-caps in their portfolios should look to continue investing in mid-cap funds through the SIP route. “Investors should come in with a clear 7-10 year investment horizon and be prepared to ride out short term volatility,” he added.
Expert takeManish Kothari, Director & Head of Mutual Funds, Paisabazaar.com said that L&T Midcap fund has been a consistent outperformer in the mid-cap category beating its benchmark index and category average over the last 3-year, 5-year, 7-year and 10-year period. “The correction witnessed in the mid-cap space since January-end of this year has already moderated valuations of the mid-cap segment. Any further correction in this space would make their valuations further attractive. L&T Midcap Fund’s risk-conscious approach makes it a perfect choice to exploit the opportunities arising out of current market conditions and create wealth over long term,” he said.