Investment Objective and Proposition

The fund's primary investment objective is "to provide long term capital appreciation by investing predominantly in equity and equity related instruments and also enabling investors to get income tax rebate as per the prevailing Tax Laws and subject to applicable conditions."

The fund is mandated to invest 80% - 100% of its total assets in equity and equity-related securities and the rest (i.e. upto 20%) in debt and money market instruments to manage its liquidity requirements.

Over the past one year, LTSF's exposure to large cap stocks has been in the range of 71% - 89%, while its exposure to mid & small cap stocks has ranged from of 7% - 26%. The fund's exposure to debt and cash over the past one year has never been more than 7% which indicates its tilt towards staying invested in equities. As per the portfolio disclosed on January 31, 2012, fund has allocated 88.8% towards large caps, a petite 7.4% in mid & small cap and has preferred to hold cash to extent of 3.8% of its total portfolio.

Equity Portfolio

As indicated by the table above, LTSF's top-10 equity portfolio constitutes of all 'A' group stocks. As on January 31, 2012 the fund held in all 40 stocks in its portfolio, out of which 'A' group stocks accounted for 99.9% and the rest 0.1% were the 'B' group ones (namely Entertainment Network India Ltd. and Ipca Laboratories Ltd.). The fund holds a portfolio which is diversified across sectors and across stocks within the sector. Top-10 stocks account for 49.7% of the portfolio while Top-5 sector concentration stands at 45.2%. However a noteworthy point is that, despite being benchmarked against S&P CNX Nifty, LTSF has churned its portfolio very often as revealed by its portfolio turnover ratio of 2.19 times.

LTSF follows a multi-cap style as it endeavours to generate superior return by investing in equity and equity related instruments across the market capitalizations. Moreover to build its portfolio, LTSF follows a combination of top-down as well as bottom-up approach for its stock selection. However in order to select a particular stock as well as to determine it potential value, the fund house is guided by one or more of the following considerations:

·         Financial strength of the companies (as recognised by financial parameters)

·         Reputation of the management and their track record

·         Brand building strategy followed by companies for their product and services

·         Companies that are relatively less prone to recessions or cycles, either because of the nature of their businesses or superior strategies followed by their management

·         Market liquidity of stock

How LTSF has fared vis-à-vis its peers

The table above reveals that over a 3-Yr time frame the fund has clocked a 29.5% CAGR, which is higher than the CAGR returns of 25.8% generated by S&P CNX Nifty. But LTSF's performance has not been very luring when compared to top performers in the category. When assessed on the volatility front, LTSF as compared to its category peers, has exposed its investor to higher risk (as revealed by its Standard Deviation of 8.64%), and at the same time has generated ordinary risk-adjusted returns (as revealed by its Sharpe Ratio of 0.21) for its investors.

Fund Manager Profile