Why Choose L&T Emerging Businesses Fund Over Other
  • One of the top performing smallcap funds.
  • Minimum SIP investment amount is Rs. 500.
  • For investors with long-term investment horizon of 7 yrs and above.
  • Robust risk management system.
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Aug 23, 2018 9 min read

Fund Review: L&T Emerging Businesses Fund

Know all about L&T Emerging Businesses Fund and why you should add it to your portfolio.

With correction phase going on in the market, large cap funds are said to be attracting investors more as compared to mid cap and small-cap funds. However, experts believe that with time in this correction phase, these funds too will yield noteworthy returns.

Who Should Invest in L&T Emerging Businesses Fund(G)?

  1. This fund is basically for those investors who have high risk-bearing appetite and seek high returns.
  2. Investors who are ready to invest for a long-term period of 7 years or more to earn capital appreciation.
  3. Those who are looking for an opportunity to invest in equity, equity related instruments, and Indian market derivatives with a main focus on the stocks of emerging companies; and even foreign securities.


Facts About L&T Emerging Businesses Growth Plan

Category Small Cap
Benchmark S&P BSE Small Cap
Launch Date 12th May, 2014
Asset Size Rs 5,280 crore (As on Jul 31, 2018)
Fund Managers Mr. S.L Lahiri & Mr. Karan Desai
Expense Ratio 2.43% (As on Jul 31, 2018)
Minimum Lumpsum Rs 5,000
Minimum SIP Rs 500
Exit Load 1% for redemption within 365 days


How Well Has L&T Emerging Businesses Scheme Performed in the Past?

Return AnalysisTrailing Returns3 - Year Rolling Returns with a gap of 6 months
ParticularsSince LaunchLast 5 YearsLast 3 YearsDec 2013 to Dec 2016Jun 2014 to Jun 2017Dec 2014 to Dec 2017May 2015 to May 2018
Category - 25.59% 14.04% 25.77% 19.62% 17.87% 13.25%
L&T Emerging Businesses 26.09% N.A 23.52% N.A. 25.41% 26.85% 23.48%
As on August 17, 2018
  • The fund’s returns in comparison to its category is very high, since launch this fund has provided annual average returns of 26%.
  • In the last three years, the returns are 23.52% which is much more than the average returns of its category.
  • Talking about consistency, this fund has performed really well and has beaten the benchmark in the rolling return yielded by it in every cycle. 


Risk Analysis: L&T Emerging Businesses

Scheme NameSDBetaSharpeMax DrawdownUpsideDownside
Category 16.41 0.96 0.67 -18.41 95 97
L&T Emerging Businesses 18.6 1.04 1.06 -19.77 115 86
As on July 31, 2018
  • Standard deviation which is 18.6% and Beta which is 1.04% of this scheme are both higher than its category with SD being 16.14% and Beta being 0.96%. This means that the scheme fluctuates much more in comparison to its category.
  • The drawdown, upside, and downside ratios of this scheme seem to be good, as in case of drawdown, it is seen that this scheme has provided loss which is equal its category. The upside and downside ratios show that this scheme has worked optimally in both phases and has managed risk really well.
  • The Sharpe ratio of this fund is 1.04% which states that it is capable of generating high returns by taking high risk.


Portfolio Allocation Analysis: L&T Emerging Businesses Fund

1. Market Allocation

  • This scheme has majorly invested in smallcap with assets allocated being 51% followed by midcap with 47%, and largecap with 2%. Category-wise this allocation seems to be fine.
  • This is a pure growth style fund which mainly invests in quality emerging companies with high growth scope available in the market at reasonable price.

2. Sector Allocation

 SectorsAllocation
Cyclical
Basic Material (Agriculture, Chemical, Metal & Mining, Steel, Building Materials) 25.68%
Consumer Cyclical (Auto related industries, Travel & Leisure, Marketing Cos, Apparel & Furniture Mfg Cos) 25.13%
Financial Services 11.26%
Real Estate 1.42%
Sensitive
Communication Services 0.88%
Oil & Gas (Energy) 0.79%
Industrial 19.18%
Technology 10.53%
Defensive
Consumer Defensive 0.0%
Healthcare 5.14%
Utilities (Power) 0.00%
  • L&T Emerging Businesses Fund has majorly allocated its assets in the cyclical and sensitive sectors with a small portion in defensive sector.
  • It seems that investment in Infrastructure is more in cyclical and defensive category which appears to be a great decision as the economy is in growth phase, with this sector having an important role to play.
  • The fund focuses more on sectors such as agriculture, building material, metal and mining, financial, IT, etc. Considering economic growth and small cap category, the overall sector allocation seems to be impressive.

3. Top Holdings      

Stock Name Weightage % 1Y Growth 5Y Growth P/BV PE
HEG Ltd 4.01 789% 2752% 9.36 9.1
Lakshmi Machine Works 2.78 15.73% 294% 4.51 35.55
The Ramco Cements 2.47 -2.07% 328.47% 3.96 30.53
Ipca Laboratories 2.46 75.27%  10.79% 3.42 28.95
Sterlite Technologies 2.31 59% 1879% 12.38 36.88
Carborundum Universal 2.04 2.44% 244.12% 4.28 28.08
Bharat Financial Inclusion 1.98 43.71% 963% 5.65 26.7
CARE Ratings Limited 1.95 -20.4% 117.61% 6.2 24.59
 Future Retail 1.91 6.13% N.A. 8.43 41.47
Grindwell Norton 1.86 29.04% 335.92% 5.68 34.51
 As on August 17, 2018
  • The ten holdings of this scheme holds 24% of the total assets which show that it is a highly diversified scheme and hasn’t concentrated much on a particular stock. This is an effective decision from risk management perspective.
  • Mostly all stocks have performed brilliantly when we talk about the three and five-year returns.
  • P/BV and PE ratios are really high which reveal that the stocks included in the portfolio are being traded at a market value that is much higher than their book value.


SIP and Lumpsum Investment in L&T Emerging Businesses Fund

PeriodAmount InvestedGrowth valueAbsolute ReturnXIRR
3-Years SIP Return 36000 49823 38.40% 22.32%
PeriodAmount InvestedGrowth valueAbsolute ReturnXIRR
3-Years Lumpsum Returns 100000 173630 73.63% 20.23%
As on July 31, 2018
  • A monthly SIP of Rs. 1000 for three years will lead to the maturity amount of Rs. 49,823 with the total invested amount being Rs. 36,000.
  • The lumpsum investment of Rs. 1,00,000 for same duration will lead to Rs. 1,73,630 with absolute rate of return as 73.63%.

Conclusion

Investors should note that this fund is an aggressive style of fund which usually tend to provide great returns when the market is at top and may dip during the downside phase. However, this scheme is likely to go down a little less as a result of its robust risk management system.

If this scheme is in accordance with your investment portfolio, then you may invest in it via our platform. In case of any clarification that you may need, feel free to consult the experts at MySIPonline.

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Peer Comparison

FundLaunch1-Year Return3-Year Return5-Year ReturnExpense Ratio (%)Assets(Cr)
L&T Emerging Businesses Fund (G)

May-14

12.23

21.05

-

2.43

5,280

SBI Small Cap Fund (G)

Sept-09

21.99

19.64

37.69

2.74

917

Reliance Small Cap Fund (G)

Sept-10

16.48

18.95

38.43

2.36

7,019

Aditya Birla Sun Life Small Cap Fund (G)

May-07

6.11

15.45

28.97

2.42

2,247

Invest in the top performing small cap funds. To know more about these schemes, read Top 5 Best Small Cap Funds.

You may also go through the experts’ review on one of the top small-cap funds. Click https://www.youtube.com/watch?v=NSf5hl1ehak to watch the full video.

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