With a one-year return of 64 per cent, L&T India Value fund is second only to Franklin India High Growth Companies in the multi-cap funds category.

The fund got off to a rocky start, having been launched in January 2010. The downward cycle that followed in 2011 saw the fund lose two percentage points more than its benchmark BSE 200 and its category as well, partly due to having begun investing when markets were high. But the fund has picked up since and has stayed ahead of the pack.

L&T India Value’s strategy of picking stocks that fly below the market’s radar sees it hold some off-beat stocks; its current portfolio includes, for instance, Lakshmi Machine Works, VST Tillers and Mangalam Cement.

Value-driven strategies usually require a longer time frame to play out. But with the yo-yoing markets of the past five years and especially the headlong dash of the recent market cycle, the fund has booked out of several stocks and sectors. It thus has a higher churn than peers.

In one, three, and five-year time frames, the fund has beaten the broad-market BSE 500 index by 10 to 40 percentage points and ranks in the top quartile of funds in its category. It has been a top quartile ranker in market upswings. Investors with a moderate risk appetite can buy units of the fund, given that it is a multi-cap scheme and as it includes a handful of riskier stocks. L&T India Value upped exposure to mid and small-cap stocks from less than 20 per cent in January 2014 to over half the portfolio by March 2015, gaining handsomely as the lot took flight.

Diffused bets Stock choices such as Indocount Industries, Prism Cement, Orient Cement, and IFB Industries paid off well. The fund had spent most of the sideways 2013 market with over 75 per cent invested in large-caps.

Though it chooses quite a few riskier stocks in the small-and mid-cap space, it spreads risk by way of holding over 50 stocks, which means taking diffused bets. Through 2014, the concentration of the top 10 stocks in the portfolio has also reduced from about 40 per cent to 25 per cent as the fund moved heavily into smaller-capitalised stocks.

The recent rally saw the fund first add swiftly to and then prune from textiles, construction and capital goods. It has reduced exposure to refineries from mid-2014, which had otherwise held steady in the earlier years. Exposure to banking, though the highest holding, has been reduced in favour of software. Recent sector additions include power, consumer durables and finance.

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