L&T India Prudence Fund - Rating & Review - Good Balanced Fund

L&T India Prudence Fund – Rating & Review – Good Balanced Fund

Roboadviso     Mutual Funds Rating     Posted On, Tue 25th July, 2017     No comments
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L&T India Prudence Balanced Mutual Fund

L&T India Prudence Fund is an open ended  equity oriented balanced scheme which aims to generate capital growth in the long term along with current income via a portfolio with specified allocated investment of 70 percent in equity and 30 percent in debt and money market instruments.

The secondary focus is on dividend distribution and generation of income. It is thus a scheme with an objective to achieve long term investment growth at moderate risk levels by maintaining a fine balance between safety offered by debt and growth potential provided by equity.

Presented below is a comprehensive review of this balanced fund which will give you all the relevant information that you need, so as to make an informed choice about whether to buy, sell, or hold this fund.

Basic costs and other information

L & T India Prudence Fund was launched on January 31, 2011. That is more than six years of success in the mutual fund market. As of July 25, 2017, this equity-focused fund has assets of INR 5,168 crores. The minimum required investment for lump sum investment route is Rs. 5000 and the SIP or Systematic Investment Planning method is INR 1,000.

The expense ratio as of 30th June 2017 is 2.02 percent. For units which are over 10 percent of the investment, if investors redeem it within a period of one year or 365 days of holding it, then the exit load is 1%.

Soumendra Nath Lahiri has been the fund manager since November 2012. Pranay Sinha joined as fund manager in May 2016, while Dhaval Shah joined in Feb 2017.

Soumnedra obtained a bachelors degree in Mechanical Engineering from the Regional Engineering College, Urethral, and a Post Graduate Diploma in Management (PGDM) from the Indian Institute of Management (IIM), Bangalore, in 1994.

Allocation of the fund

As of 30 June 2017, the fund’s allocation stands as 70.49 percent in equities, 21.69% in debt, 7.82% in Cash/Call.

As of 30 June 2017, the top 6 sectors that the fund’s portfolio focuses on include Banking/Finance (24.35%), Construction (11.68%), Automobile (6.78%), FMCG (5.03%), Engineering (5.01%), and Technology (3.67%).

As of 31 May 2017, the top 6 stocks that make up the fund portfolio include HDFC  (4.12%), ICICI Bank (3.94%), HDFC Bank (3.25%), Larsen & Toubro (3.19%), ITC (3.13%), and Indusind Bank (2.22%).

Performance

As of July 25, 2017, L&T – India Prudence Fund (G) has produced a 15.41 percent return per annum on investment in the last six years period. This shows that the fund beat the category average of 12.16 percent for the same period. From the time of launch the fund has delivered 21.42 percent per annum returns.

In the past 1, 3, and 5 years, the fund has shown 19.62, 16.66, and 20.30 percent returns per annum. Thus the 3-year returns of the fund are nearly 2% points better than the category returns. On a 5-year period, the outperformance margins of the fund vis-à-vis the category is also 2% better.

If the topmost holdings are taken into consideration, then it can be said that the L&T India Prudence Fund heavily leans towards the banking and finance sector. As per data of the past 3 years, the fund’s standard deviation, i.e., the volatility of the returns of the fund vis-à-vis its average, is 10.15% as of June 30, 2017. This is marginally higher than the category average which is 9.66% for the same period.

When the returns of L&T India Prudence Fund are compared with its peers during the past 5 year period, then at 20.30 percent returns it has done better than similar funds like HDFC Balanced Fund (19.49%), ICICI Prudential Balanced Fund (20.21%),and  SBI Magnum Balanced Fund (19.57%).

Analysis

It is possible to achieve more only where sufficient precautions have been put into place. L&T India Prudence Fund is one such scheme that offers the investors the unique balance of growth and safety. A fund that has been successful for more than 6 years, deftly allocates investments between equity and equity linked securities and money market and debt instruments, with the aim to strike a balance between stability and growth prospective.

The fund’s investments are majorly biased towards large caps with a high growth aim. The equity section of the fund is invested in varied stocks that are diversified across sectors and industries, with the continued focus on creation of long-term capital growth. The scheme also keeps open adequate room for flexibility as the allocation for equity can range anywhere between 65-75 percent. This ensures that the returns are maximized while avoiding market unpredictability.

The debt part is invested in debt instruments which are safer so as to minimize volatility and achieve and maintain stability. The debt portfolio quality is also really good with limited sensitivity to interest rate.

On the basis of risk adjustment, L&T India Prudence Fund is definitely one of the best long-term capital growth investment opportunities with moderate to aggressive levels of risk. Investors in the category of moderate risk with long-term financial goals or who are planning for retirement may find this fund to be suitable.

Should I sell, buy, or hold?

The consistent and strong performance by L&T India Prudence Fund since 2011 makes us give it a thumbs-up. Our suggestion to all investors is – “Buy.”

Pros

Excellent Fund Manager
Excellent Fund Size
Excellent Performance
Excellent Performance Consistency
Good Fund House
Low Expense Ratio

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