This little over five years old fund predominantly invests in quality large-cap stocks. L&T Equity Fund was launched as Fidelity Children’s Plan—Education, before L&T took over Fidelity. While the investment timeframe is short, the fund has witnessed a mixed run of the markets—a bullish phase in 2012 and 2014, as well as the volatile phase of 2013 and 2015.
What has worked for the fund is the disciplined asset allocation that it maintains with about 30-35 per cent allocation to debt, and the rest in equities.
For instance, in 2014, the fund benefited by increasing its exposure to G-Secs during the bond rally of 2014, when the yield on 10-year government bonds fell by a little over a percentage point. The call was so strong that by December 2014 the fund had over 25 per cent allocation to government bonds. The equity allocation is likewise well-managed with measured opportunities that have worked. For instance, in 2015, it pruned its holdings in PSU banks and went defensive in its approach to sector allocation.
Advertisement
The equity portfolio is made up of 59 stocks, which are predominantly large-caps, while the allocation to mid-caps is not as profound at under 20 per cent. Spreading the investments across several stocks helps mitigate risks, which is reflected in its performance.
Investments are in quality stocks, dominated by private sector banking giants like HDFC Bank and IndusInd Bank. Banking is the top sectoral bet, with allocation to sector being the highest at the moment at 12.4 per cent. What strikes out with this fund is its consistency in volatile phases of the market, when it has done better than the broader BSE 500 index and its peers in the balanced fund category. The performance of the fund can be gauged by its returns since inception, which stand at an average 18 per cent, which makes a case for investing in it.
Advertisement
