L&T India Value fund follows a strategy of investing in under-valued stocks. Usually, the fund’s weighted portfolio valuations are below that of the broader market.

The fund also juggles around with market capitalisation, giving it the character of a multi-cap fund.

Over one- and three-year periods, the fund has beaten both its BSE 200 benchmark and the broader BSE 500 by a margin of one to two percentage points. Performance is better than similar-themed Birla Sun Life Value.

The fund didn’t fare well in the 2011 market downswing, losing more than its benchmark.

It was started only in January 2010, and has a relatively shorter track record. Investors can retain their holdings in the fund.

Performance

On an annual rolling return basis since inception, the fund has done better than its benchmark 67 per cent of the time. This lower ratio is largely due to a poor 2011, with stocks such as CCCL, Shiv-Vani Oil, Sasken Communications, BL Kashyap and Motilal Oswal Financial plunging sharply.

A large share of mid- and-small caps — accounting for about 40 per cent of the portfolio — also brought down returns.

The slowdown of 2011 saw the fund losing two percentage points more than the BSE 200.

During market upturns so far, the fund has done well. In the 2012 uptick, its mid- and-small-cap bent was an advantage.

Over 2013, the fund has lowered its share of these stocks and they now account for about 30 per cent of the portfolio. While they do raise risk, the fund has usually picked up stocks with sound fundamentals.

Sector trends

Significant additions to software during calendar year 2013 pushed the sector to the top. Banking holds the next top weight in the portfolio. Telecom stocks too, have been increasingly added recently.

The focus on value saw the fund adding stakes in sectors such as textiles, agro-chemicals, energy, mining, power and infrastructure, while lowering holdings in pharmaceuticals over the past year. Timely sector calls include exits from gems and jewellery in early 2013, reducing holding in capital goods from mid-2011 onwards, adding auto ancillaries in 2011 and entertainment last year.

Stock picks such as Amara Raja Batteries, FAG Bearings, MindTree, HCL Technologies, Page Industries, Lovable Lingerie and Bayer CropScience have worked in the fund’s favour. The portfolio is quite diverse with over 60 stocks now, though that’s significantly lower than the 80-plus stocks of the earlier years.