As investors are gaining experience in the mutual fund market, the risk appetite they have is also increasing. Thousands of investors who previously used to invest just in large-caps, and hybrid schemes, are now shifting towards small-caps, mid-caps, and other aggressive funds’ categories. One such scheme that is observing heavy intake of investors is L&T Emerging Businesses Fund. In this post, we are going to see what this scheme is, and why this small-cap fund is becoming a choice of aggressive investors.
L&T Emerging Businesses Fund (G): Introduction
This scheme was launched on May 12, 2014, and in just 4 years it has accumulated assets worth Rs 5,280 crores (as on Jul 31, 2018). The objective that it follows is to provide long-term capital appreciation by investing majorly in stocks of companies that are in their development phase. At present, the scheme has 48.15% investment in small-caps and 51.84% investment in mid-cap companies. The investment in mid-caps has recently been increased as the mid-cap index has started showing a recovery. Currently, L&T Emerging Businesses Fund NAV is Rs 26.73 (as on Aug 14, 2018), and you will also have to pay an annual expense ratio of 2.43% (as on Jul 31, 2018), which will be charged from your principal amount. As for the load charges, there is no entry load, but an exit load of 1% will be charged if you redeem your investments before 365 days. The minimum amount required to start an investment in this scheme is Rs 5000, and you can start a SIP at MySIPonline for as low as Rs 500. Now let’s see why this scheme is best for aggressive investors.
Why Is it Best for Aggressive Investors?
L&T Emerging Businesses Fund is one of the top performers in its respective category and the reason behind that is optimal management done by Mr. Karan Desai and Mr. Soumendra Nath Lahiri. Now, there are two particular reasons that make this fund a great choice for aggressive investors and they are:
Exceptional Returns: In the past 1 and 3 years, the L&T Emerging Businesses Fund Returns are 11.53%, and 20.63%, respectively (as on Aug 14, 2018). In the same time period, the returns provided by the benchmark are 1.68% and 10.94%, and the returns provided by category are 7.41%, and 12.99%, respectively. The aggressive approach of investment is responsible for the great margin and will surely help scheme in providing even better performance in future.
Asset Allocation: The second reason that makes this scheme a great choice for aggressive investors is its current asset allocation. As we saw above that as of now L&T Emerging Businesses Fund Growth Plan only has investments in mid-caps (51.84%) and small-caps and no investments are made in large-cap companies. This is done because of the recent rise of mid-cap and small-cap stocks. Now, although the risk with this allocation is high, so will be the returns and that is what aggressive investment is all about.
So, these are the reasons that make L&T Emerging Businesses Fund a great investment choice for aggressive investors.