LIC MF Banking & Financial Services Fund Direct Growth INF767K01NK6

LIC MF Bnk& Fin Serv earns a Below Average Process Pillar rating.

The process benefits from the stability of the management team. Specifically, the fund has not seen a manager change in the last four years. However, the rating is held back by its parent firm's inferior risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 2.4 stars. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis. Unremarkable risk-adjusted performance also holds the process back. This can be seen in the fund's 10-year alpha calculated relative to the category average, which suggests that the process has struggled over that period.

This strategy prefers smaller market-cap companies compared with the average fund in its peer group, the Sector - Financial Services Morningstar Category. But in terms of style (value/growth) exposure, it does not have much of a bias and resembles the category's typical portfolio. Analyzing additional factors, this strategy has continually had more high-yield exposure than the Morningstar Category average during recent years, with the portfolio holding more stocks with high dividend or buyback yields. Higher-yield stocks can provide steady income, but also have their risks. Dividend payers may cut payouts, for instance, if their earnings fall. Different from its historical appetite, however, the Yield factor was in line with the Morningstar Category average in recent months. This strategy has also demonstrated a bias towards lower-momentum stocks over its peers over the past years. Momentum tends to be a powerful force in asset markets, as stocks that have done well recently usually continue to do so in the short term. As top performers change, this can sometimes be hard to capture without higher trading costs. Similarly, in recent months, the strategy also had less exposure to the Momentum factor than peers. Furthermore, the strategy had more exposure to high-volatility stocks compared with Morningstar Category peers in recent months. Such stocks tend to rise faster and fall harder than the broad market. High-volatility exposure contributes to stronger performance during bull markets, but often at the cost of losing more during downturns. 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 has allocations in its top two sectors, consumer cyclical and technology, that are similar to the category. The sectors with low exposure compared with category peers are financial services and healthcare, with financial services underweighting the average portfolio by 2.6 percentage points of assets and healthcare similar to the average. The portfolio is composed of 34 holdings and its assets are more dispersed than the typical peer in the category. In the most recent disclosure, 68.4% of the strategy's assets were concentrated in the top 10 fund holdings, as opposed to the category average's 73.6%.