|Category:||Equity: Large & Mid Cap|
|Assets:||R 3,001 crore (As on May 31, 2015)|
|Expense:||2.26% (As on Mar 31, 2015)|
The scheme aims to follow bottom up stock picking, without any bias for sectors or market capitalizations. The scheme will attempt to be fully invested in equities at all times, however, upto 20 per cent of its assets can be invested in cash and cash equivalents.
+ Abhijeet Dakshikar since Jun 2013
+ Soumendra Nath Lahiri since Nov 2012
The fund is good at managing risk. An above-average performer in the large-cap space, L&T Equity Fund (formerly Fidelity Equity Fund) has climbed in the Value Research rating in the past one year due to a sharp improvement in returns in this bull-run. The fund's 59.7 per cent return in the last one year beat the benchmark and category by nearly 10 per cent. The fund's average ratings which have hovered between 3 and 4-stars for much of its life, have improved to 4-star since April 2014.
While many funds in the large-cap space consciously adopt a concentrated strategy to outperform the index; L&T Equity prefers the other extreme. It consistently owns a very large number of stocks in its portfolio with average holdings usually under 3 per cent, a reason why the current stock count is 53, compared to the category average of 43 stocks. However, this is way below the 70-80 stocks it held under Fidelity.
An extremely fragmented portfolio requires a rather large number of the fund's calls to pay off, to deliver stand-out returns, which is a cause of concern. Yet, the move has helped the fund contain downside, but mutes returns in a trending market.
The other distinct feature is the sizeable mid-cap allocation compared to peers. While the typical large-cap funds hold over 90 per cent of their assets in bluechips, L&T Equity has kept large-cap allocations at 65-70 per cent, with the rest going into mid or small-caps. Mid cap allocations have risen in the last one year and provided a kicker to returns.
The long-term returns of L&T Equity Fund appear middling, but the recent improvement offers promise over the long term; 5-year returns for the fund, at 16.6 per cent are ahead of the category by 4 per cent annually, 3-year returns of 18.6 per cent compare well to the top performers and so do the 1 year returns. The fund's recent returns have largely helped lift its overall returns, which had suffered a setback in 2012 and 2013. Buy in small lots and raise exposures if the fund keeps up the good work.