L&T Mutual Fund launches Emerging Businesses Fund

The new fund offer (NFO) will remain open from April 22–May 6, 2014.

April 21, 2014 5:56 IST | India Infoline News Service
L&T Mutual Fund today announced the launch of L&T Emerging Businesses Fund. The fund is a two-year closed-ended scheme with automatic conversion into an open -ended equity scheme after the completion of two years from the date of allotment. The aim of the fund is to generate long term capital appreciation from a diversified portfolio of predominantly equity and equity related securities including equity derivatives in the Indian markets. The key theme is to invest in “Emerging Businesses” - that is 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.
The new fund offer (NFO) will remain open from April 22–May 6, 2014.
Speaking at the launch, Ashu Suyash, Chief Executive Officer, L&T Investment Management, said, “With the launch of the L&T Emerging Businesses Fund, we are broadening our offering of equity funds. This NFO provides investors with an opportunity to benefit from investing in the undervalued segment of the market while adding style diversification to their portfolios. We believe emerging business built around a scalable opportunity with strong leadership, good governance and balance sheet strength can reward its investors handsomely. The closed-ended cum open ended structure ensures that investor money is not locked in for long periods of time and should the need arise; money may be redeemed at the end of the 2 year close period. Further investors can participate through the systematic investment plan route as well.”
Soumendra Nath Lahiri, Head of Equities and the Fund Manager of L&T Emerging Businesses Fund said, “The small cap space is under-valued, under-researched and under-owned. If we look back, small cap stocks have significantly underperformed other segments of the market since the last market peak in Dec 2007 / Jan 2008. However, despite underperformance over the past few years, small cap stocks have outperformed large and mid caps from a 10-year perspective and also have bounced back more strongly as compared to large cap stocks after sluggish periods.
Stock selection is quite critical to investing in this segment, as not all small cap companies would grow to become mid cap or large cap. Most of the companies in the small cap space that have emerging businesses and where there is growth will reward investors who stay invested for a long time regardless of the market they are in.”
The Fund is benchmarked to the S&P BSE Small Cap Index, and will have a normal allocation to equity and equity related securities of small cap companies within a range of 50% to 100% of net assets. The allocation to equity and equity related companies of other companies will be within a range of 0 – 35%. The Fund may invest up to 35% of net assets of the fund in debt and money market instruments. The Fund also has the mandate to additionally invest in foreign securities. The fund will be managed by Soumendra Nath Lahiri, Rajesh Pherwani and Abhijeet Dakshikar (foreign securities).
At L&T Mutual Fund, we follow a proprietary investment process called G.E.M (Generation of ideas, Evaluation of businesses / companies and Manufacturing and monitoring of portfolio). While identification of such themes and investment ideas constitute “G” in our G.E.M. process, we rely on our strong in-house research team to thoroughly evaluate the investment ideas and our experienced fund managers then use the shortlisted investment ideas in the scheme portfolios depending on the mandate of the fund.
The minimum amount for lump sum investments is Rs 5,000. The Systematic Investment Plan (SIP) option will be available during the NFO period with a minimum of six installments (for monthly SIP) and four installments (for quarterly SIP) and each single installment of a minimum of Rs. 1,000 each, subject to a minimum aggregate of Rs. 6,000.

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