L&T India Large Cap Fund-Direct Plan

ISIN INF917K01FQ0

Overall analysis 

3-yr rolling excess returns has been in the range of 2-4%.Tracking error against benchmark have been in the range of 2-4% overall; but the funds’ performance in the short run has been deteriorating. The fund had given a neutral excess return in comparison to its peers and also been neutral to the first quartile over the past 1 year.

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 rolling return show that the fund is going with the third green median line from June2016 but it has gone down in 2018 but again came parallel to the green line so it has been better performing than median. 

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 good 3-year excess returns, touching 4% per annum and a significant time around the negative side, whilst lower than index volatility of 2-3% pa. However, the excess return came down to around -4.81% in August 2018.

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.

The tracking error of the fund has always been above 1.5% and also gone up to 4% which means it has always been in the bracket of 2-4% which means it is barely 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 the fund was in negative from June 2016 to June 2019 has gone above till 2 but right now in June 2023 -0.25 which is not ideal.

Prepared by – Shreyas Walve, August 2023