LT Emerging Business Fund: A Comprehensive Guide for Investors

Introduction to LT Emerging Business Fund

LT Emerging Business Fund#39;s unique niche in the equity fund universe is its focus on small cap stocks, specifically in the manufacturing, engineering, and real estate sectors. While the fund has experienced a challenging period in the past year with returns negative by approximately 11%, investors are advised to give it time as the fund has a strong track record of outperforming over the long term.

Performance Overview

Despite the recent performance dip, LT Emerging Business Fund stands out as one of the top performers in the small cap category. Since its inception in May 2014, the fund has exhibited remarkable consistency in beating its benchmark, the BSE Small Cap Index. The fund managers, SN Lahiri and Karan Desai, have made strategic bets on small-cap companies with rich cash flows, ensuring the fund does not take excessive risks.

Key Performance Metrics

Annualized Return: 25.85% since inception (versus 21.81% for the BSE Small Cap Index) Category Performance: Beat category by 6-14 percentage points over 1-year, 4-6 percentage points over 3 years Investment Timeline: A SIP of Rs 5000 a month starting at inception is now worth Rs 4.11 lakhs

Risk Management and Diversification

Understanding the right approach to investing in small cap funds is crucial. For long-term investors, LT Emerging Business Fund presents a promising opportunity. A key factor is the risk appetite and the investment horizon—investors who are looking for quick returns might find this fund less suitable.

The fund employs a diversified strategy, with holdings spread across various sectors including basic materials, consumer cyclical, industrials, financial services, and technology. This diversification helps manage risk while allowing the fund to capitalize on growth opportunities across different industries.

Pros and Cons of LT Emerging Business Fund

Pros: Excellence in small cap performance Strategic sector investments Consistent beating of benchmarks and category

Cons: Short-term volatility may be high Risk of the small cap market's fluctuation

Investment Insights for Long-Term Goals

For investors with a long-term perspective, LT Emerging Business Fund remains a strategic investment choice. Small cap stocks offer the potential for higher returns, but this comes with the understanding that the journey will include periods of volatility. Long-term holding periods are recommended to harness the full potential of the fund's strategy.

Alternative Options

If the returns of LT Emerging Business Fund do not meet expectations over the next couple of quarters, shifting to the Alexis Small Cap Fund could be a prudent decision. Alexis Small Cap Fund has historically maintained a performance close to or above its benchmarks, making it a reliable alternative.

Conclusion

LT Emerging Business Fund is a formidable player in the small cap segment, but its suitability depends on individual investor goals and risk tolerance. For those willing to invest for the long haul, it presents an excellent opportunity to participate in the growth story of young, dynamic companies.

Contact us at 8087044807 if you have more specific investment queries and we will help outline the best strategies for your portfolio.