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L&T Midcap Fund: Fund Review

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L&T Midcap Fund is one of the top funds in midcap space. The fund gave an annualized return of 19.21% since its inception in August 2004. The fund’s performance has beaten its benchmark and peers consistently. The fund manager S.N. Lahiri is ranked as the best manager in the small and mid-cap space by Morningstar. He uses a bottom-up approach and does extensive research to identify opportunities in the mid-cap space that has the potential to grow faster than the market. Investors looking at investing in undervalues stocks can invest in this fund for a long-term.

 

Performance

L&T Midcap Fund is an outstanding player in the midcap funds. The fund has managed to beat its benchmark ever since its inception. With the midcap undergoing correction the fund has managed to give better returns than the benchmark.

L&T Midcap Fund has beaten its category by 3-4 percentage points and its benchmark by 3-6 percentage points in the 3 and 5-year returns. The fund has performed better than all its peers in the 3 and 5-year returns proving that the fund has been doing consistently well in the long-term.

Fund1 Year Return (%)3 Year Return (%)5 Year Return (%)
L&T Midcap Fund-14.72%14.37%24.17%
HDFC Mid-Cap Opportunities Fund-12.40%12.89%20.80%
Franklin India Prima Fund-10.01%12.53%21.69%
DSP Midcap Fund-11.54%12.97%21.25%
Kotak Emerging Equity Scheme-12.50%13.02%23.50%

A SIP investment of Rs 5,000 a month in L&T Midcap Fund started 5 years ago is worth Rs 4.15 lakhs now. A profit of Rs 1.15 lakhs in just 5 years. Even if one chose to redeem their investment then they would be liable to pay tax only on Rs 40K as gains up to Rs 1 lakh are exempt from taxes.

Fund Information

L&T Midcap Fund is ranked first in the mid-cap category. The fund manager uses a bottom-up approach and their proprietary GEM approach which has 3 rigorous steps for picking stocks. Generation of ideas, Evaluation of companies and Manufacturing and monitoring of portfolios.  The fund is research focused and uses a disciplined research based investment approach to identify opportunities in the midcap space. It aims to reduce the portfolio risk by owning stocks with a high margin of safety. The fund focuses on companies that have a scalable opportunity, balance sheet strength, good governance and the potential to outperform their peers.

L&T Midcap Fund invests 86.23% of its assets in equity, 0% in debt and holds 13.77% in cash. The fund is an attractive investment diversifier for seasoned investors. It has the potential to grow at a faster pace than the market. It provides investors with an opportunity to invest in undervalued stocks.

The fund believes in diversification with 78 stocks in the portfolio. The top five holding sectors constitute 37.93% of the portfolio. These include Banks (8.03%), Industrial Products (7.91%), Finance (7.42%), Cement (7.39%), and Pharma (7.18%).

Recommendation

L&T Midcap Fund is ideal for long-term goals. Investors whose risk-taking ability is high can look at investing in this fund. The fund accepts both lump sum and SIP investments. This fund has higher ups and downs (volatility) than other equity funds but can yield much better returns. Invest in this fund for an investment horizon of at least 5 years to give the best results. Do not look at the returns for this fund in short-term. The short-term returns can be manipulative.

Fund NameL&T Midcap Fund
Launch DateAugust 9th, 2004
AUMRs 3,685 Cr
Return (Returns greater than 1 year are annualized)Since Launch: 19.21%
1 Year: -14.72%
3 Year: 14.37%
5 Year: 24.17%
Expense Ratio2.69%
Fund Category RiskHigh
Investment PlanGrowth
Minimum Investment Horizon5+ years
Minimum InvestmentRs 5,000
Minimum Additional InvestmentRs 1,000
Exit Load1% if withdrawn within 1 year
Fund ManagerS.N. Lahiri
Vihang Naik

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