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L&T Emerging Business Fund (G) has become an eminent player in the small-cap category within 4 years after its inception. The consistent performance in the small-cap category is a rare attribute which has been maintained since inception through skillful management by the management team at L&T Mutual Fund. Small-cap funds are highly volatile as the stocks selected by such funds are of companies which lack the experience to navigate the unwanted trends in the economy and are financially unstable.
L&T Emerging Businesses Fund has gained a lot of popularity due to its terrific performance in the small-cap section. A lot of investors at MySIPonline have raised queries regarding the fund. As a result, the experts have deeply analysed every aspect of the scheme to assist the investors with better suggestions.
Investment Technique
The fund manager of L&T Emerging Businesses Fund believes in keeping a large number of stocks from different sectors in the portfolio to minimise the risk while taking the advantages of the various sectors. A total of 90 stocks are present in the current portfolio with a PE ratio of 24.14. In recent times, no allocation is done in large-cap companies while almost equal allocations are made in the mid and small-cap companies.
The fund manager chooses more than 15 sectors out of which chemicals, engineering, services, financial, construction and metals are mostly preferred. Growth style of investment is done to invest in the emerging businesses with growth potential.
Returns Comparison
Since inception May 2014, L&T Emerging Businesses Fund has generated an annualised return of 23.01%. In recent years when the small-caps have faced tough time maintaining positive returns, this fund has comparatively performed better than the peers and is ranked 1st concerning 3-year trailing return. It has a difference of 10 points in 3 year trailing returns with the benchmark. Though it has not faced an adverse market yet, hence nothing can be concluded for the performance of L&T emerging businesses growth fund in the unfavourable market, with the experienced and innovative management staff, it can be expected to maintain its reputation under any condition.
Risk Measurement
The risk parameters of L&T Emerging Businesses Fund are outstanding as it has maintained a Sharpe ratio of 0.87 which is much higher than the peers and is best in the category. It proves that it is a worth the risk it poses and has the attributes to build enormous wealth in the future. Being a small-cap fund, it has been able to impress on the basis of the risk factor as well.
The experts at MySIPonline suggest this scheme to the investors who seek long-term capital appreciation and wealth creation through small-cap equity instruments. It possesses high risk, hence conservative investors can skip this scheme, but for the aggressive investors, it provides the opportunity to grow enormous wealth in the long term.
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