At L&T Mutual Fund, our emphasis is on delivering superior long-term risk-adjusted performance. And so we follow a disciplined approach to investment and risk management. Our proprietary investment process - GEM - comprises three main steps to investing: Generation of Ideas, Evaluation of companies and Manufacturing and Monitoring of portfolios. A robust monitoring and risk management process ensures checks and balances at every stage. Here is what happens through every step of the investment process:
Generation of ideas: Analysts and fund managers actively identify new ideas: For equity investing, the search spectrum includes investment team meetings, meetings with a company's management, competitors, suppliers, industry experts, regulators, external research and reports. And for fixed income funds, investment ideas are born out of team strategy meetings, in-depth interaction with issuers and market participants, macro analysis and internal and external research ideas.
Evaluation of companies: Filters such as liquidity, market capitalisation ownership and other parameters help identify opportunities, which are then thoroughly evaluated for profitability, business attractiveness, competitive positioning, balance sheet strength, management track record, corporate governance and valuations for equities. Thorough credit or issuer analysis and macro analysis underpins the evaluation framework for identifying issuers and instruments for fixed income portfolios.
Manufacturing or Monitoring of portfolios: Among all the ideas that are generated and evaluated, the fund manager picks those that have the most potential. Portfolios are monitored continuously to ensure that they are positioned to meet their investment objectives and are within the set risk framework. A fund manager may decide to exit a holding on achieving the price target or for other reasons such as weakened business prospects or credit, or if better investment opportunities wait in the wings.