L&T Emerging Opportunities Fund Series II opens today and will close on the 20th of June, 2018. It will focus on small companies in their early phase of growth. In this respect, L&T Mutual Fund also emphasizes its proprietary ‘GEM’ model – generation of ideas, evaluation of companies and manufacturing and monitoring of portfolios.
The scheme will be required to invest 65-100% of its assets in the stocks of small cap companies, 0-35% in other types of companies and 0-20% in debt. The scheme will have the S&P BSE Small Cap TRI (Total Returns Index) has its benchmark. Its tenure will be 1110 days or roughly 3 years and one month.
Vihang Naik will manage this fund. He also manages L&T Midcap Fund, L&T Long Term Advantage Fund – I and L&T Emerging Opportunities Fund – Series I. Out of these, L&T Midcap has beaten its benchmark and peers over various time frames from 1-10 years. L&T Long Term Advantage also has a similar record but has faltered over the past year to some extent.
L&T Emerging Opportunities Fund Series I was launched in Feb 2018. Its return over the past three months is -0.85% but it is much better than the benchmark Nifty Smallcap 250 (-9.22%). In other words, L&T Emerging Opportunities Series I has managed to avoid much of the small-cap carnage that has occurred over the past 2-3 months, a strong argument in its favour.
Small cap funds in India have given stellar returns over the past five years (29.8% CAGR) and their valuations aren’t exactly rock bottom. However, L&T has a strong and growing reputation for its equity funds. A close-ended fund is also immune from the redemption pressures that open-ended funds face when markets see volatility. This allows the fund manager to focus on picking the best stocks and delivering good returns. If you are willing to accept the high level of risk that comes with small-cap investing, this may well be the fund for you.
Minimum Investment: Rs 5,000
Options: Dividend Payout and Dividend Sweep (Dividend Sweep automatically invests in the dividend in another open-ended L&T scheme of your choosing)
Fund Manager: Vihang Naik
Benchmark: S&P BSE Small Cap TRI (Total Returns Index)