LIC MF Small Cap Fund Regular Transfer of Income Distribution cum Cap Wdrl plan INF397L01JV5

LIC MF Small Cap Fund earns a Below Average Process Pillar rating.

The process benefits from its team of two portfolio managers, which is sufficient to execute the process. However, the rating is weakened by its parent firm's disappointing risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 2.5 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis. The parent firm's five-year risk-adjusted success ratio of 23% also holds the rating back. The measure indicates the percentage of a firm's funds that have beat their respective category's median return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup.

This strategy has tended to hold more growth stocks than others in the Small-Cap Morningstar Category. But in terms of market capitalization, it is on par with peers. Looking at additional factor exposure, this strategy has constantly downplayed yield, with its portfolio holding fewer companies with high dividend or buyback yields compared with Morningstar Category peers in recent years. Returning capital to shareholders often is not the highest priority of such businesses. The shares of such companies can deliver strong returns if they fulfill their growth projections, but they also carry more risk. In the latest month, the strategy was also less exposed to the Yield factor compared with Morningstar Category peers. This strategy also has tilted in favor of high-quality stocks, those that have demonstrated low financial leverage and solid return on equity, during these years. High exposure to the quality factor means holding companies that are consistently profitable, growing, and have solid balance sheets. Compared with category peers, however, the strategy had less Quality factor exposure in the latest month. In addition, this strategy has taken on exposure to high-momentum stocks in these years. Momentum is based on the premise that stocks that have recently outperformed will continue to outperform, and those that have underperformed will stay behind. In recent months, however, the strategy had less Momentum factor exposure over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio is overweight in industrials and utilities relative to the category average by 12.0 and 7.2 percentage points, respectively. The sectors with low exposure compared with category peers are financial services and healthcare, underweight the average by 8.9 and 6.4 percentage points of assets, respectively. The portfolio is composed of 68 holdings and is relatively concentrated. In particular, 26.3% of the fund’s assets are housed within the top 10 holdings, compared with the typical peer's 13.7%.