L&T Midcap Fund Review: Impressive Turnaround in Performance!

Last Updated on

This is a performance review of L&T Midcap fund. Launched in Aug 2004, it has grown to the 6th position in terms of AUM ( ~ 3,700 Crore). Off the cuff, it appears to be a volatile fund since it has fallen by -7% in the last year, but it has still managed to keep pace with BSE Midcap. Let us dig deeper and find out.

You can explore the previous fund reviews at the archive. Also, check out the Quantum Long Term Equity fund review at Youtube published yesterday (16-3-2019)

L&T Midcap Fund Review: Impressive Turnaround in Performance!

L&T Midcap Fund: Investment strategy: Prior to the SEBI categorization rules, it had a mandate to “invest in companies whose market capitalization falls between the highest and the lowest constituent of the Nifty Free Float Midcap 100 Index”. Perhaps ironically its mandate is now a lot broader!

As per SEBI rules, Mid Cap stocks are those ranked between 101 and 250 based on the full market capitalisation and a midcap fund only needs to be invested in 65% of such stocks. The benchmark remains as  Nifty Midcap 100 Index (new version from NSE). The AMC hopes to control portfolio risk by select stocks based on:

• Management quality, strategy and vision
• Business dynamics
• The financial strength of the company
• Free cash flow
• Returns on capital employed and returns on equity
• Credit Rating for the instrument in case of Debt instruments

The fund has seen several fund manager changes in the past. As you would see from the analysis below, the performance has picked up only after the appointment of S. N Lahiri.

L&T Midcap fund manager change history
Screenshot courtesy: Morningstar

L&T Midcap fund vs NIfty 100 Midcap TRI

The 3Y, 5Y and 7Y returns and risk (standard deviation) for L&T Midcap fund is compared with Nifty 100 Midcap TRI. If we sort NSE stocks by free-float market cap, the top 100 are called, large cap, the bottom 250 small cap and the middle 150 as mid cap.

Out of these 150, stocks the top 50 stocks from NSE Midcap 50. The Nifty 100 Midcap Index, formerly known as NIFTY Free float Midcap 100, contains all stocks from Midcap 50 index and the rest 50 are chosen from the 150 stocks based on average daily turnover. Please have a good look at the three graphs below and then scroll down to the observations.

Three-year rolling returns and risk

L&T MIdcap Fund vs Nifty 100 TRI Index: Three-year rolling returns and risk

Five-year rolling returns and risk

L&T MIdcap Fund vs Nifty 100 TRI Index: Five-year rolling returns and risk

Seven-year rolling returns and risk

L&T MIdcap Fund vs Nifty 100 TRI Index: Seven-year rolling returns and risk

Observations: Notice how the performance picks up mid-2013. Prior to the appointment of S. N. Lahiri, even the risk was compared to that of the index. For the last 5.5 years or so, the fund has outperformed the index in terms of return and risk.

L&T Midcap fund vs Peers

Let us now look at the five-year rolling return and risk performance of L & T Midcap with other popular peers like HDFC Mid Cap Opportunities (read review here), Franklin India Prima Fund (read review here), Kotak Emerging Equity, Axis Midcap and Sundaram Midcap (read review here).

Rolling Return (5Y)

L&T MIdcap vs peers 5 year rolling return

Rolling Risk (5Y)

L&T MIdcap vs peers 5 year rolling risk

Rolling Return (10Y)

L&T MIdcap vs peers 10 year rolling return

Observations: Overall that is pretty good. L & Midcap Fund is neither the worst nor the best and that is good enough.

Summary

Overall, I think L &T has turned around the fortunes of this fund well, but the fund manager has not yet been severely tested. Existing investors do not have anything to worry about as of now. New investors can certainly consider this fund, but all investors, as always must keep an eye not only on performance but also on the AUM inflow each month. Be on guard if there is a sudden surge in AUM.

Other mutual fund reviews

You can explore the previous fund reviews at the archive. Also, check out the Quantum Long Term Equity fund review at Youtube published yesterday (16-3-2019)

Do share if you found this useful

About the Author M Pattabiraman author of freefincal.comM. Pattabiraman(PhD) is the author and owner of freefincal.com.  He is an associate professor at the Indian Institute of Technology, Madras since Aug 2006. Pattu” as he is popularly known, has co-authored two print-books, You can be rich too with goal based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management.  He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. Pattu publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year (2.5 million page views) with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis. He conducts free money management sessions for corporates  and associations(see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints, TamilNadu Investors Association etc. Contact information: freefincal {at} Gmail {dot} com (sponsored posts or paid collaborations will not be entertained)
Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; where to invest; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. I can do the talk via conferencing software, so there is no cost for your company. If you want me to travel, you need to cover my airfare (I live in Chennai)

Connect with us on social media


Content Policy

Freefincal has original unbiased, conflict-of-interest-free,  topical reports, reviews, commentary and analysis on all aspects of personal finance like mutual funds, stocks, insurance etc. All guest authors and contributors to the site also do not have any conflict of interest. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. No promotional content We do not accept sponsored posts and link exchange requests from content writers and agencies. This is our privacy policy Our website is non-profit in nature. The revenue from the advertisement will only be used for hosting charges, domain registration charges, specific plugins necessary for traffic growth and analytics services for search engine optimisation.

Do check out my books


You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingMy first book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.  It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You WantGamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantMy second book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.  Get the pdf for ₹199 (instant download)

Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

1 Comment

  1. Hello sir for your diagrams the black line is not able to be seen in black background. Please use another color for the L&T MidCap.

Leave a Reply

Your email address will not be published. Required fields are marked *