L&T Emerging Businesses Fund: A small cap focused strategy aimed at delivering alpha return

Smaller companies which are in a relatively early stage of growth phase, generally offer reasonable long term growth potential.

There are large numbers of such emerging businesses across sectors that are listed on the Indian exchanges and several of these companies could witness sustained growth over a period of time.

Presenting L&T Emerging Businesses Fund

Launched in May 2014, L&T Emerging Businesses Fund is an open ended equity scheme which focuses on spotting such investment opportunities predominantly in the small cap segment of the market.

L&T Emerging Businesses Fundadopts a bottom-up stock selection approach and aims to own small cap businesses with strong long term growth potential, available at reasonable valuations.

The Scheme is managed by Mr. S. N. Lahiri and Mr. Karan Desai (For Foreign Securities), the fund's monthly average asset under management (AUM) stood at Rs. 620.35 crore (as on March 31, 2017).

Investment Approach

  • Focus on investing in companies which are in the early stage of development and have the potential to grow their revenue and profits at a higher rate as compared to broader market
  • At least 50% exposure to stocks beyond top 200, in terms of market capitalization
  • Bottom-up stock selection using our proprietary G.E.M investment approach. G.E.M - comprises three main steps to investing: Generation of Ideas, Evaluation of companies and Manufacturing and Monitoring of portfolios
  • Valuation plays an important role in all investment decisions – focus on investing in stocks with adequate margin of safety
  • Robust risk management framework - a well-diversified portfolio with focus on managing liquidity and other portfolio risks

Why invest in L&T Emerging Businesses Fund?

  • The Fund invests predominantly in small and micro-cap stocks / businesses - a segment that offers long term growth potential
  • In the current scenario where earnings are expected to recover and grow significantly over the next few years, Small and micro-cap stocks, if chosen carefully could deliver risk adjusted returns.
  • Experienced investment team with lead fund manager having experience of over 20 years in Indian equities
  • Strong focus on risk management which is critical while investing in emerging businesses
  • Optimum fund size to capitalize on the investment opportunities in the small and micro-cap segment of the market

Who should consider investing in L&T Emerging Businesses Fund?

  • Investors looking to benefit from long term business growth potential of emerging businesses
  • A potentially high alpha product suitable for aggressive investors with long term investment horizon
  • Investors having portfolios that are skewed towards large cap or diversified funds and looking for style diversification / differentiated portfolio
  • Investors having investment horizon of at least 3-5 years

Conclusion

It is necessary to spot the long term winners among a host of small cap companies which are available for investment, to be able to benefit from their growth potential. Thus, smallcap companies have the potential to grow their revenue and profits at a relatively higher rate.

Disclaimer – This document is for general information only and does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this information. This document provides general information on performance; financial planning and/or comparisons made are only for illustration purposes. The data/information used/disclosed in this document is only for information purposes and not guaranteeing / indicating any returns. This material provides general information and comparisons made (if any) are only for illustration purposes. Investments in mutual funds and secondary markets inherently involve risks and recipient should consult their legal, tax and financial advisors before investing. Recipient of this document should understand that statements made herein regarding future prospects may not be realized. Recipient should also understand that any reference to the indices/ sectors/ securities/ schemes etc. in the document is only for illustration purpose and should not be considered as recommendation(s) from the author or L&T Investment Management Limited, the asset management company of L&T Mutual Fund or any of its associates. Recipient of this information should understand that statements made herein regarding future prospects may not be realized or achieved. Neither this document nor the units of L&T Mutual Fund have been registered in any jurisdiction except India. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions

L&T Emerging Businesses Fund - An open-ended equity scheme

The product is suitable for investors who are seeking*:

  • Long term capital appreciation
  • Investment predominantly in equity and equity-related securities, including equity derivatives in Indian markets with key theme focus being emerging companies (small cap stocks); and foreign securities

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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