L&T Midcap Fund: Mutual fund review

For many investors, putting money in a scheme focused largely on midcaps would be a bold call in the present market conditions. But then not all mid-cap schemes buy momentum stocks which do well in the short term and fail miserably in the long term. There are some midcap funds that carefully construct a portfolio of stocks, delivering returns as good as large-cap schemes. One such scheme is L & T Midcap scheme. The scheme’s fund manager, Soumendra Nath Lahiri, has constructed a portfolio of second-best companies in their sectors especially from the universe of mid-sized companies. This works as good as a large-cap schemes. A key reason being the focus is on picking the next best thing in a sector once the stipulated limit of large-sized companies is crossed. Due to this, the scheme is a consistent performer despite being in a highly volatile category of mid-sized companies. In the past five- and 10-year periods, the scheme has delivered 23% and 24% returns, while its benchmark index, Nifty Midcap 100 TRI, has given 18% and 20% returns in the same period, respectively.

Portfolio change (past 6 months)

New entrants	Complete exits	Increase in allocation
Canara Bank	Akzo Nobel India
Future Retail	Brigade Enterprises	Federal Bank
Godfrey Phillips India	Avanti Feeds	ICICI Securities
Max Financial Services	HDFC AMC	Union Bank of India
National Aluminium Company	OCL India
Odisha Cement	Simran Wind Project
Techno Electrical & Engineering

Returns (in %)

Period	CAGR Return	SIP CAGR Return	Midcap Fund- AVG CAGR Return
1 Year	-4.43	-3.19	-2.76
3 Year	17.22	7.53	12.22
5 Year	22.90	13.41	18.28

Returns peer comparison (in %)

Scheme	1- year	3-year	5-year
L&T Midcap Fund	-4.43	17.22	22.90
DSP Midcap Fund	-0.94	15.76	21.01
HDFC Mid-Cap Opportunities Fund	-1.84	14.98	20.06
Invesco India Midcap Fund	4.68	14.38	19.86
Kotak Emerging Equity Scheme	-1.59	15.19	22.91

Source: Accord Fintech; Compiled by ETIG Database

Expert Take
RUPESH BHANSALI,
Head, Mutual Funds, GEPL Capital
Soumendra Nath Lahiri is known for his stock-picking ability for more than two decades. Unlike some mid-cap schemes, which have large-caps in top five investments, L & T Midcap is quite clear about its universe. It is a pure midcap scheme. The scheme’s portfolio is constructed in such a way that it protects the downside with exposure to defensive such as pharmaceuticals (10%) and as economy improves the scheme would gain from its exposure to industrials (15%) and banking and financial services (15%).