Fund Review: L&T Mid Cap Fund Growth
According to SEBI’s new mandate, mid-cap mutual funds are those who will invest at least 65% of the total asset under management in equity and related instruments of mid-cap stocks and the remaining can be invested elsewhere. Mid cap companies are those which lie in the top 101-250th companies in terms of their full market capitalization. Today, in this write-up, we will discuss one of the star-performing mid cap schemes which has made a fixed space in the list of the best recommended mid cap funds of our experts.
Table of Content
Mid cap schemes have provided high returns recently after several months of dip. That’s why we have recently shared the best mid cap funds to invest in 2018. Taking the process ahead, we have provided a detailed review of one of the top performing mid cap funds from our recommendation, i.e., L&T Mid Cap Fund. Let’s find all the in-depth details of the scheme.
Who Should Invest in L&T Mid Cap Fund (G)?
This is ideally suitable for:
- Aggressive investors with a moderately High-Risk appetite.
- Investors who are looking forward to generating High Returns whilst being exposed to high volatility.
- Investors with a Long-term Investment Horizon of 5 years and above.
Facts About L&T Mid Cap Fund
| Fund House | L&T Mutual Fund |
| Inception Date | August 09, 2004 |
| Type | Open-ended |
| Class | Equity |
| Category | Mid Cap |
| Net Assets (As on July 31, 2018) | Rs. 3,066 Crore |
| Expense Ratio (As on July 31, 2018) | 2.39% |
| Fund Managers | Soumendra Nath Lahiri since June 2013 and Vihang Naik since June 2016 |
| NAV (As on August 17, 2018) | Rs. 142.54 |
How Well Has L&T Midcap Fund Performed in the Past?
| Return Analysis | Trailing Returns | 3 - Year Rolling Returns with a gap of 6 months | |||||
|---|---|---|---|---|---|---|---|
| Particulars | Since Launch | Last 5 Years | Last 3 Years | Dec 2013 to Dec 2016 | Jun 2014 to Jun 2017 | Dec 2014 to Dec 2017 | May 2015 to May 2018 |
| Benchmark: S&P BSE MidCap | - | 26.08% | 13.68% | 23.36% | 16.19% | 21.18% | 14.74% |
| L&T Mid Cap Fund | 20.87% | 31.23% | 15.61% | 34.06% | 25.81% | 24.30% | 19.57% |
| As on August 17, 2018 | |||||||
Considering the past record of this scheme of L&T MF, the fund has outperformed both its benchmark as well as the category at all time periods. Although in the past 3 years, the margin with which it has beaten the benchmark’s average has been reduced, the same has been maintained in the long-run. The past 5 year return of 31.19% is strong evidence of the outperformance of the fund beating both its category and benchmark’s average which have given 27.40% and 26.08 as on August 17, 2018.
Risk Analysis: L&T Mid-cap Fund
| Particulars | SD | Beta | Sharpe | Max Drawdown | Upside | Downside |
|---|---|---|---|---|---|---|
| Benchmark: S&P BSE MidCap | 16.46 | 1 | 0.65 | -14.55% | 100 | 100 |
| Category | 16.62 | 0.95 | 0.48 | -18.41% | 89 | 98 |
| L&T Mid Cap Fund | 16.41 | 0.94 | 0.73 | -19.17% | 95 | 85 |
| As on July 31, 2018 | ||||||
- While looking at the past 3 years’ Standard Deviation and Beta coefficient of the scheme(both denoting the market volatility), one can tell that the risk that the scheme possesses is about the same as its category and benchmark.
- Looking at the Sharpe Ratio (measuring risk-reward) of the fund, i.e., 0.73 against the benchmark’s and category’s average of 0.48 and 0.65, it can be clearly stated that the scheme delivers higher returns on the per unit risk that it takes.
- Now, analyzing the Maximum Drawdown of the fund, which is 19.17% against the category’s and benchmark’s value of 18.41 and 14.55 percent, it can be said that the scheme involves a greater degree of risk.
What Portfolio Allocation of L&T Mid Cap Tells?
1. Market Capitalization
At present, the scheme has the maximum investment in mid-cap stocks, i.e., 80.54 percent, 7.43% in large-cap stocks, and the rest in small cap companies. The fund managers, Mr. S. N Lahiri and Mr. Vihang Naik follow a growth style of investing and the bottom-up stock picking strategy.
2. Sector Allocation
| Sectors | Allocation | |
|---|---|---|
| Cyclical | ||
| Basic Material (Agriculture, Chemical, Metal & Mining, Steel, Building Materials) | 23.75% | |
| Consumer Cyclical (Auto related industries, Travel & Leisure, Marketing Cos, Apparel & Furniture Mfg Cos) | 16.73% | |
| Financial Services | 19.79% | |
| Real Estate | 3.09% | |
| Sensitive | ||
| Communication Services | 0.00% | |
| Energy | 1.18% | |
| Industrial | 17.16% | |
| Technology | 5.41% | |
| Defensive | ||
| Consumer Defensive | 3.68% | |
| Healthcare | 9.20% | |
| Utilities | 0.00% |
Going with the sector allocation, L&T Mid cap Fund’s portfolio constitutes 27 sectors and 77 holdings in all. This is evident of the strong diversification, and thus sound risk management done from the fund managers’ end. Considering the data above, the maximum allocation is done in the cyclical segments where good growth possibilities are seized.
The highest exposure of the fund is made in all the growth-oriented segments. Further, L&T Mid Cap Scheme is overweight on cement, construction, industrial, and chemical sectors and has selective exposure to financial institutions and banks.
3.Top Holdings
| Stock Name | Weightage (%) | Absolute Returns | Valuation | |||
|---|---|---|---|---|---|---|
| 1 Year | 5 Year | P/BV | PE | |||
| Bharat Financial Inclusion | 3.7 | 38.98% | 981.92% | 5.66 | 26.72 | |
| Emami Ltd | 3.27 | 3.09% | 172.69% | 12.96 | 78.42 | |
| Berger Paints India | 3.14 | 38.7% | 330.22% | 14.18 | 64.46 | |
| The Ramco Cements | 2.79 | 21.5% | 349.14% | 3.79 | 29.18 | |
| Graphite India | 2.58 | 296.5% | 1395.02% | 8.24 | 12.31 | |
| Exide Industries | 2.43 | 41.15% | 123.91% | 4.51 | 34.09 | |
| City Union Bank | 2.29 | 30.53% | 400% | 3.1 | 21.9 | |
| Sundram Fasteners | 2.14 | 67.50% | 1928.17% | 8.36 | 34.63 | |
| Abbott India | 2.11 | 84.64% | 493.54% | 9.84 | 41.53 | |
| Cholamandalam Invest & Finance Co. | 1.99 | 28.16% | 585.49% | 4.38 | 23.19 | |
| Returns: As on August 17, 2018 | ||||||
According to our analysis, 15 stocks have been added to the portfolio in January 2018, whereas 17 stocks were removed. This is evident of the high fund’s turnover of 78%. Such frequent portfolio churning done by the fund managers has been proved favorable for the fund, thus helping it to outperform the benchmark’s returns consistently.
SIP and Lumpsum Investment in L&T Mid Cap Fund
| Time-Period | SIP Investment | Lumpsum Investment | ||||
|---|---|---|---|---|---|---|
| Invested Money | Growth Value | Absolute Returns | Invested Money | Growth Value | Absolute Returns | |
| 3 Year | 360,000 | 453,736 | 26.04% | 100,000 | 154,680 | 54.68% |
| 5 Year | 600,000 | 1,041,283 | 73.55% | 100,000 | 354,086 | 254.09% |
| 10 Year | 1,200,000 | 3,657,644 | 204.80% | 100,000 | 76,012 | 476.01% |
| Returns: As on June 30, 2018 | ||||||
SIP Investment:
The monthly investment of Rs. 10,000 initiated 5 years before would have become Rs. 10,41,283 against the investment amount of Rs. 600,000.
Lumpsum Investment:
Lumpsum investment of Rs. 100,000 for the same duration would have grown to Rs. 354,086 at an annualized return of 50%.
A Final Note- Conclusion
Investors should notice that:
- The fund is seen holding the maximum investment in mid cap stocks, thus in the bull phase, it is bound to deliver stupendous returns.
- The historical returns and the strong bets taken by the fund managers depict that the scheme has and it will deliver handsome returns to the investors.
Here, the only thing to consider is that the investors should stay invested for a longer horizon and have the appetite for high risk.
If you find this scheme an ideal one for your portfolio, do not delay investing in it. You can easily make an investment through our online investment platform. For more suggestion or recommendations on other categories or schemes, stay tuned with us.
- 100% Paperless
- No Transaction Charges
- Easy to Invest
- Safe & Secure
Must Read:
Peer Comparison
| Fund | Launch | 1-Year Return | 3-Year Return | 5-Year Return | Expense Ratio (%) | Assets(Cr) |
|---|---|---|---|---|---|---|
| L&T Midcap Fund (G) | Aug-04 | 7.99 | 15.63 | 31.81 | 2.39 | 3,066 |
| DSP BlackRock Midcap Fund (G) | Nov-06 | 9.95 | 13.49 | 29.85 | 2.19 | 5,676 |
| Kotak Emerging Equity Scheme (G) | Mar-07 | 8.79 | 13.32 | 31.43 | 2.34 | 3,327 |
| ICICI Prudential Mid Cap Fund (G) | Oct-04 | 7.5 | 9.82 | 29.2 | 2.41 | 1,535 |
| Sundaram Mid Cap Fund (G) | Jul-02 | 5.49 | 11.48 | 28.88 | 2.12 | 6,138 |
Invest in the top performing mid cap funds. To know about the best schemes, read 5 Best Mid Cap Funds to Invest in 2018
Besides, here’s our expert review on one of the other leading stars of the mid cap category, i.e., DSP BR Mid Cap Fund. To know all the details of the same, read Fund Review: DSP BlackRock Midcap Fund Growth
