L&T Focused Equity Fund – Direct 

ISIN INF917K01A98

Overall analysis 

1-yr rolling excess returns and TE against benchmark have been good at starting but then went negative. The funds’ performance in the starting years have been impressive but failed to perform in the long term as compared to its peers.

Performance analysis 

Rolling returns in quartiles

The rolling return chart shows excess 3-year annualised returns in context of peer return quartiles. The blue line’s time above the third green median line indicates the fund’s better than median performance.

The funds rolling return chart shows that the fund crosses the third green median line which indicates the fund is better than median performance. On Mar-2020, the fund gave the highest 1Y-Rolling Return of 10.49%. But later it showed the worst return of -20.86% on Sep-2021. 

Rolling risk/return (Snail-trail) 

The rolling risk/return chart shows excess 3-year annualised returns relative to the index. The top left quadrant would indicate higher returns with lower volatility than index.

This fund has shown impressive 1-year excess returns, touching 10.49% per annum with a risk of        -1.095%. However, the excess return came down to negative over the past year.

Tracking error

The tracking error chart shows how the fund ‘tracks’ against the index. The higher the TE, the more active the fund’s return has been, with the 2-4% range considered to be barely active, 4-6% range considered to be reasonably active and anything higher attributed to concentrated/focused funds. Funds with TE of less than 2% can be considered to be closet indexers.

Tracking Error of the fund has been good overall. It showed maximum TE 10.53% on Dec-2020 and then constantly surviving between 3-6% which shows it is Moderately Active.  

Information ratio

The information ratio is a measure of ‘risk-adjusted return’ as it’s the excess return per unit of excess volatility. Active funds should have IR of higher than 1, ideally higher than 1.3 at least to indicate skill. 

The information ratio of the fund of 1Y-IR was 2.05 on Feb-2020 at starting but later on it went negative and could not mark up to 1, which shows it’s not an active fund. 

Prepared by – Ashutosh Sahu, August 2023