L&T Emerging Businesses Fund Vs HDFC Small Cap Fund

L&T Emerging Businesses Fund and HDFC Small Cap Fund both form part of small-cap Mutual Fund schemes. Small cap funds are the ones who invest their corpus in shares of companies having corpus amount of less than INR 500 crores. Small-cap funds form the bottom of the pyramid when schemes are classified on the Basis of Market capitalization. These schemes have a high-risk and are considered good Income earners in the long-run. These schemes generally have a low share price thereby; individuals can purchase larger quantities of these shares. Though both L&T Emerging Businesses Fund and HDFC Small Cap Fund belong to the same category yet; they differ on various parameters such as NAV, performance, and so on. So, let us understand the differences between both the schemes.

L&T Emerging Businesses Fund

L&T Emerging Businesses Fund is managed by L&T Mutual Fund. This scheme was launched in the year 2014 and is an open-ended scheme. The scheme invests its corpus predominantly in equity-related of small-cap companies. Through its investments, it tries to attain Capital growth in the long-term. The scheme uses BSE S&P Small Cap Index to construct its Portfolio. L&T Emerging Businesses Fund is managed jointly by Mr. Karan Desai and Mr. S. N. Lahiri. As on April 10, 2018, some of the top holdings of L&T Emerging Business Fund include HEG Limited, Lakshmi Machine Works Limited, Ramco Cements Limited, Ipca Laboratories limited, and Nocil Limited. The scheme is suitable for investors who have a high-risk appetite and wish to earn more by Investing in shares of small-cap companies.

HDFC Small Cap Fund

HDFC Small Cap Fund is an open-ended Mutual Fund scheme offered by HDFC Mutual Fund under small cap category. This scheme was launched on April 03, 2008. The objective of the scheme is to generate capital growth in the long-term by primarily investing in shares of small-cap companies. The scheme uses Nifty Small Cap 100 as its benchmark index to construct its portfolio. It also uses NIFTY 50 as an additional index. The fund managers managing the HDFC Small Cap Fund are Mr. Chirag Setalvad and Mr. Rakesh Vyas. As on March 31, 2018, some of the top holdings of HDFC Small Cap Fund’s portfolio consisted of Sonata Software Limited, SKF India Limited, Tata Metaliks Limited, and Aurobindo Pharma Limited.

L&T Emerging Businesses Fund Vs HDFC Small Cap Fund

Though both L&T Emerging Businesses Fund and HDFC Small Cap Fund belong to the same category of small-cap funds yet, there exists differences between both the schemes. So, let us understand the differences between both the schemes that are divided into four sections, namely, Basics Section, Performance Section, Yearly Performance Section, and Other Details Section.

Basics Section

The basics section is the first one in the comparison of both the schemes. The parameters that form part of this scheme includes scheme category, Fincash Ratings, and Current NAV. To begin with the scheme category, it can be said that both the schemes belong to the same category, that is, Equity Mid & Small-Cap. With respect to Fincash Ratings, it can be said that L&T Emerging Businesses Fund is a 5-Star scheme while HDFC Small Cap Fund is a 4-Star Fund. The comparison of Current NAV between both the schemes portrays that HDFC Small Cap Fund leads the race. As on April 09, 2018, the NAV of L&T Emerging Businesses Fund was approximately INR 27 while the NAV of HDFC Small Cap Fund was approximately INR 46. The table given below summarizes the comparison of both the schemes.

Performance Section

The performance section compares the Compounded Annual Growth Rate or CAGR between both the schemes. This CAGR is compared at different time intervals, namely, 3 Month Return, 6 Month Return, 3 Year Return, 5 Year Return, and Return Since Inception. A holistic comparison of both the schemes shows that HDFC Small Cap Fund leads the race. However, at a certain time interval, even, L&T Emerging Businesses Fund has done well. With respect to 5 Year Returns, there is no data in the column of L&T Emerging Business Fund since the scheme was launched in the year 2014 and has not completed 5 years. The summary comparison of performance section is tabulated as follows.

Yearly Performance Section

It is the third section, in the comparison between both the schemes. In this section, the absolute returns of both the schemes are compared. A comparison of this scheme shows that L&T Emerging Business Fund leads the race in many instances. The summary of yearly performance section is as follows.

Other Details Section

It is the last section in the comparison between both the schemes. The comparable elements forming part of other details section include Minimum SIP and Lumpsum investment, AUM, exit load, and others. With respect to minimum SIP investment, it can be said that in both the schemes, the minimum SIP amount is same, that is INR 500. Likewise, that minimum lumpsum amount is also same for both the schemes that is INR 5,000. The comparison of AUM between both the schemes shows that there is a significant difference between both of them. As on February 28, 2018, the AUM of L&T Emerging Businesses Fund was INR 4,286 crores while the AUM of HDFC Small Cap Fund was INR 2,670 crores. The table given below summarizes the comparison of both the schemes.

Growth of 10k Investments over the years