L&T Tax Advantage Fund
- Investment Style: Large Growth
- Investment Process: The focus is on companies that are efficient allocators of capital
- Fund Manager: Soumendra Nath Lahiri
The fund is managed by head of Equities Soumendra Nath Lahiri, who has about 20 years of experience on the investment side and has been managing or advising on portfolios for over 10 years.
The investment process aims to find companies through bottom-up stock-picking. However, the fund is prone to large underweight or overweight positions at a sector level given the benchmark-agnostic style of investing. The manager tends to invest in a lot of fresh ideas as a part of the portfolio. This can tend to give rise to a portfolio that is very distinct as compared with its peers. Risk management plays an important role in the process. Unlike Fidelity, which used to manage diversified portfolios of 70-90 stocks, Lahiri prefers running portfolios of 50-60 stocks. Stock concentration risk is avoided by maintaining a maximum individual stock exposure of about 6% in the portfolio.
In our opinion, the fund house has a good foundation in place since taking over Fidelity's mutual fund business in India. The processes have been structured in line with the fund house's goals and the investment team has remained stable. Nonetheless, we think it prudent to adopt a wait-and-watch approach and look at how the AMC builds on their existing processes and structure over the long term. Moreover, we would like to see the team work together over a longer period of time before we gain further confidence in the offering.
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