Edelweiss Small Cap Fund – NFO Review (Jan 25,2019

Edelweiss Small Cap Fund – NFO Review

Indian Financial Market scenario – The stock market is at 10,864 at Nifty as o Jan 25th, generated  -2.5% return, the mid-cap index has shown a weaker performance with -13.5 in 1 year tenure. However, twist is Smallcap index has consistently beaten the nifty index since 2003. This is an election year. Investing in top mutual funds with SIP route would prove beneficial in the long run. 

Category analysis – As per news and market information, Nifty midcap index has generated over 20.30%, in 2 years category and 54.60% in 3 year period. Investing in midcap and small cap mutual funds through SIP has been a significant wealth generation vehicle over the years.

Midcap-small cap category is ideal for investors with high-risk appetite, believe in Mutual Fund investment through SIP. Best Mutual Fund invest in this fund in this category is through long term SIP. Top mutual funds in this category are SBI Small Cap Fund, DSP Small cap Mid cap and Reliance Small cap fund.

The fund house – Edelweiss Mutual Fund Ltd. is part of Edeweiss group, started about a decade ago, has six actively managed equity funds, four hybrid funds, seven debt funds, three ETFs and five fund of funds. Edelweiss MF Ranks at 21 as per the AUM Data available at AMFI site as on dec 2018. It is a mid-size mutual fund company with portfolio of 11,894 crore (asset under management) as per Dec 2018 data

Mutual FundEdelweiss Mutual Fund
Scheme NameEdelweiss Small Cap Fund
Objective of SchemeThe investment objective of the scheme is to generate long term capital appreciation from a portfolio that predominantly invests in equity and equity related securities of small cap companies. However, there is no assurance that the investment objective of the Scheme will be realized and the Scheme does not assure or guarantee any returns.
Scheme TypeOpen Ended
Scheme optionsGrowth and dividend
Scheme CategoryEquity Scheme – Small Cap Fund
New Fund Launch Date18-Jan-2019
New Fund Offer Closure Date01-Feb-2019
Indicate Load SeperatelyNo entry load, exit load – 1.00% <1year< NIL
Minimum Subscription Amount5000
For more information  Please Visit Website Onlinewww.edelweissmf.com (Buy mutual Fund online)

INVESTMENT OBJECTIVE   The investment objective of the scheme is to generate long term capital appreciation from a portfolio that predominantly invests in equity and equity related securities of small cap companies. However, there is no assurance that the investment objective of the Scheme will be realized and the Scheme does not assure or guarantee any returns

Asset allocation pattern

Investments Indicative Allocation 

Equity related securities of Small Cap companies* 65% to 100% Medium to High 

Equity and Equity related securities of other companies 0% to 35% Medium to high 

Debt and money market instruments^ 0% to 35% Low 

Where will the scheme invest?

Subject to the Regulations, the corpus of the Scheme will mainly be invested in any (but not exclusively) of the following securities: 

Investment in Equity securities: The Scheme will invest in Equity and Equity related instruments inclusive of convertible debentures, equity warrants, convertible preference shares, equity derivatives etc.

Derivatives: The Scheme may invest in Derivative Instruments subject to SEBI guidelines. Derivative products are specialized instruments that require investment techniques and risk analysis different from those associated with stocks and bonds. The Scheme may invest in the following Equity Derivative Instruments like: Futures and Options

Foreign Securities 

Debt Securities – Government Securities, Commercial papers, certificate of deposits, T-bills, fixed deposits etc.

Also, Investments in the Schemes of Mutual Fund

Fund manager details 

Name and ageEducationExperience
Mr. Harshad Patwardhan, 47 yearsB.Tech. (IIT), MBA(IIM) and a CFAqualificationMr. Harshad Patwardhan, is a B.Tech. (IIT), MBA (IIM) and a CFA by qualification. Mr. Patwardhan has an overall work experience of over 23 years in the investment management function and has joined Edelweiss AMC as Chief Investment Officer  ‐  Equity and a key personnel. Prior to joining Edelweiss AMC, he was associated with JPMorgan Asset Management India Private Limited since June 2006 as CIO‐ Equities. Prior to that Mr. Patwardhan worked for two years with Deutsche Equities India Private Limited as a senior research Fund Manager: 1. Edelweiss Large & Mid Cap Fund 2. Edelweiss Tax Advantage Fund 3. Edelweiss Multi‐Cap Fund 4. Edelweiss Mid Cap Fund 5. Edelweiss Long Term Equity Fund (Tax Savings) Edelweiss Small Cap Fund 35 analyst and has had extensive experience with several foreign brokerage houses covering a variety of sectors.  

Should You Invest? – This is best mutual fund category for inestors with high risk appetite and for a long term goal, SIP in this mutual fund category can earn investors high return over a 8-10 years period. Investor can have some exposure in this category, the fund manager is well experienced, the mid-cap fund managed by him has generated handsome return over 5 years, he has been in the fund management tea of other 5 mutual fund schemes. Other mutual fund companies like SBI Mutual Fund, DSP Mutual Fund and Reliance mutual fund have Best Mutual Fund to invest in SIP in this category. 

Aditya Birla Sun Life Dual Advantage Fund – Series 2 NFO Review. Should you invest?

Aditya Birla Sun Life Dual Advantage Fund – Series 2 NFO Review. Should you invest?

Name of the scheme: Aditya Birla Sun Life Dual Advantage Fund – Series 2

This is an election year, a year expected to be filled with volatility in the markets and Mutual Fund companies have geared up with offerings to suit the investment behaviour of investors. To engage conservative retail investors, the fund offers high exposure in fixed income category, yet aiming to give some higher return with stock investment upto 30%, top mutual fund companies have come up with hybrid funds in many forms. 

Aditya Birla Sunlife’s New Fund offering is one such case in point.  Aditya Birla Sun Life Dual Advantage Fund – Series 2 is a closed ended Hybrid fund is highly tilted to the fixed income category. 

Mutual FundAditya Birla Sun Life
Scheme NameAditya Birla Sun Life Dual Advantage Fund – Series 2
Objective of SchemeThe primary investment objective of the Scheme is to generate income by investing in a portfolio of fixed income securities maturing on or before the maturity of the Scheme. The secondary objective is to generate capital appreciation by investing a portion of the Scheme corpus in equity and equityrelated instruments.The Scheme does not guarantee/indicate any returns. There can be no assurance that the schemes’ objectives will be achieved.
Scheme TypeHybrid fund
Scheme CategoryClosed Ended fund
Liquidity The Scheme will have a duration/tenure of 1180 days from and including the date of allotment. The NAV of the Scheme will be announced on every business day. No redemption or repurchase will be permitted prior to maturity of the Scheme. The Scheme will be listed on NSE / BSE and/or any other recognized stock exchanges as may be decided by AMC from time to timeand the Unit holders who wish to redeem units may do so through Stock Exchanges at prevailing listed price on such Stock Exchange.
New Fund Launch Date17th January 2019
New Fund Offer Closure Date1st January 2019
Indicate Load SeparatelyNo exit load , no entry load
Minimum Subscription AmountRs. 1,000/- and multiple of Rs. 10/-there after
BenchmrkCRISIL Hybrid 75+25 – Conservative Index

Intended portfolio allocation (Debt – 70-95%, Equity – 5-30%)

InstrumentsCredit Rating
A1 AAA AA Not Applicable
Certificate of Deposits (CDs)0-5%– 
Commercial Papers (CPs) 0-5%
Non-Convertible Debentures (NCDs)30%-35% 25%-30% 15%-20% 
Government Securities0-5%
Treasury Bills/ CBLO/ Reverse Repos/ Liquid Schemes0-5%
Equity and Equity related securities5%-30%


Source – Amfi

What is a Mutual Fund NFO – A new fund offer occurs when a fund is launched, allowing the firm to raise capital for purchasing securities. Mutual funds are one of the most common new fund offerings marketed by an investment company. The initial purchasing offer for a new fund varies by the fund’s structuring.

Investment vehicle analysis – It is a debt tilted hybrid scheme, having upto 30% equity exposure.  

INVESTMENT STRATEGY 

Fixed Income Strategy: Investments in fixed income / debt investments would be made only in securities which will mature on or before the date of the maturity of the Scheme. Scheme will invest in the fixed income / debt securities with a view to hold them till the maturity. The scheme has the flexibility to invest in the entire range of debt instruments. The actual percentage of investment in various fixed income securities will be decided after Scheme Information Document considering various factors like the prevailing interest rate and inflation scenario, performance of corporate sector, general liquidity and other considerations. 

Equity Strategy: The corpus of the equity component of the scheme will be primarily invested in diversified equity and equity related securities of the companies that have a potential to appreciate in the long run to achieve the market linked appreciation (upside) and premium of exchange traded options. The Scheme will primarily focus on companies that have demonstrated characteristics such as market leadership, strong financials and quality management. The quality or strength or management would be a key focus area

Fund manager details 

Debt Fund manager

Name an ageEducational QualificationExperience
Mr. Mohit Sharma, Age – 38 yearsPGDCM – IIM Calcutta; B Tech – IIT MadrasHe has around 13 years of experience of which 10years are in financial markets. He joined Aditya Birla Sun Life AMC Ltd on October 2015. Prior to joining Aditya Birla Sun Life AMC Ltd, he ran his own healthcare- tech business (June 2012 – May 2015). He has also worked as an Interest Rates Trader in Standard Chartered Bank (May 2007 – June 2011) and ICICI Bank Ltd (June 2006 – April 2007). He started his career in the Equity Research in Irevna Ltd (June 2005 – June 2006).

Equity Fund manager

Name an ageEducational QualificationExperience
Mr. Vineet Maloo 36 yrs B.Com.C.A. Has around 14 years of experience in Financial servicesPrior to joining ABSLAMC He had been providing analytical support to the Chief Financial Officer of Hindalco Industries Limited, prior to which he has worked with Aditya Birla Management Corporation Ltd. & M/s. D. K. Chhajer & Co., Chartered Accountants

RISK FACTORS ASSOCIATED WITH CLOSE ENDED SCHEMES: 

∙ A close ended scheme endeavours to achieve the capital appreciation only at the scheduled maturity of the scheme. However, there is no assurance that the said objective will be achieved at the scheduled maturity of the Scheme and there is a risk that the capital invested may not be fully realisable upon maturity of the Scheme. 

∙ Moreover, given the uncertain nature of equity markets, the AMC may be required to liquidate the equity portfolio and the proceeds may be kept in cash and invested largely in cash equivalents/money market instruments towards the Maturity/Final Redemption date and to that extent these investments made may not be in line with the asset allocation pattern. 

∙ Investors who wish to exit/redeem before the scheduled maturity date may do so through the stock exchange mode. For the Units listed on the exchange, it is possible that the market price at which the Units are traded may be at a discount to the NAV of such Units. Hence, Unit Holders who sell their Units in a Scheme prior to maturity may not get the NAV returns.

To invest or not – This is a retail focused fund, with a protection with high rated bonds and minimum exposure in equity. The minimum investment amount is Rs. One thousand. However, this is a closed ended fund, it means, the investors can only invest during the NFO period and exit on maturity. Investors neither can invest during the tenure nor withdraw (except demat format, one can trade depending on the liquidity). It leaves investors with no option to invest incase of a market fall or withdraw incase it has given extra ordinary return. Though the investment is for fixed tenure, it doesn’t have guaranteed return You may check https://www.amfiindia.com/new-fund-offer for FMP instruments. This is a clear NO for small and new investors. An savvy mutual fund investor can look at investing upto 10% of their cash/ fixed income portfolio in these kind of investments.

There are many balanced funds like ICICI Prudential Balanced Advantage Fund, Tata Balanced Fund etc. Incase anyone wants to block money for a period, Fixed Maturity plans with complete debt investment  may fetch bit higher return compared to fixed deposits.

IIFL NCD issue Jan 2019, should you buy or avoid?

IIFL NCD issue Jan 2019, should  you buy or avoid?

India Infoline has launched NCD issue Jan 2019. Should retail investors buy? Bond issues targeting an assorted investors includng retail investor has been a common theme in the last year. After a series of debenture issues in 2018, now India Infoline finance has come up with an issue of Rs. 2000 crore this year.

What is Bond or NCD?

About the Company – IIFL Holdings Limited – Incorporated in 1995, Listed on NSE and BSE in 2005. IIFL has pan-India presence as well as subsidiaries in major global financial centres. IIFL is three key group companies, India Infoline Finance, IIFL Wealth and IIFL Securities.

IIFL Wealth – Family office, AIFs, advisory and distribution services 

IIFL Securities – Retail and institutional broking, investment banking 

IIFL Wealth – Family office, AIFs, advisory and distribution services 

IIFL Securities – Retail and institutional broking, investment banking 

IIFL Finance deals with Home finance, LAP, Gold loan, Commercial Vehicle, SME and Micro Finance loans. India Infoline Finance Limited (IIFL Finance) was incorporated in 2004 under the flagship of IIFL Holdings Limited and presently offers small-ticket loan products to retail borrowers, delivered through a pan India branch network of 1,755# branches and digital channels. Now it has a two ddistinct subsidisry a micro finance company and a home fiancé company.

Object of the issue – For the purpose of onward lending, financing and for repayment/prepayment of interest and principal of existing borrowings – At least 75% of the Net Proceeds of the Issue. The money also will be used for General Corporate Purposes – up to 25% of the Net Proceeds of the Issue. An investor with a demat account can apply for the issue. Issue opens on 22nd Jan, and closes on 20th Feb, however, the allotment is on first cum first served basis. NCD unit priced at 1,000, on can apply for minimum 10 units.  Issuer aims a raising funds of Rs 2000 cr

Nature of bonds – Secured and Unsecured NCDs

Credit Ratings “AA/Stable” by CRISIL and ICRA,”AA+/Stable” by Brickwork

The company offered both secured and unsecured debenture in this issue. The secured fixed income instrument offers a tenure of 36-60 months, with coupon rate varying from 9.5 – 10.2% interest. Category 1 – Corporates, category II – Non-institutional investors, III – HNIs, Category IV – Retail investors. Retail investors can subscribe upto 30% of the issue.

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Mymoneystreets take – Indiainfoline is an established name in broking, NBFC, Mutual Fund and as investment firm, it is also and established distributor of financial products. The current issue of the company is offering atleast 2% higher return compare to bank fixed deposit. With AA rating, investors can look at invest in the secured debentures. Unsecured debentures carries higher risk and higher return.   Investor can look at 30% of fixed income allocation in NCD portfolio to give it an edge and diversification.

Top 5 tax saving mutual fund schemes (ELSS) for 2019

We approach 2018-19 financial year end, search for the best tax saving instrument under 80C ends at tax saving #ELSS mutual fund schemes. By far the best investment tool with double tax benefit, in investment and accumulation, return in is taxed at 10% above 1 lakh profit.

With the lowest lock-in period of 3 years and maximum exposure to the capital market, it is a wealth creator for young professionals or anyone who wishes to focus on long-term wealth creation through equity market. For the beginners, ELSS is an actively managed equity fund by experienced fund managers with an equally equipped equity research team. Over last 5 years, ELSS category has given over 15% annualised return on an average which is way higher than any other tax saving tools. Hence, it is my favourite tax saving instrument.

Top 10 reasons to invest in ELSS schemes –

  1.  Minimum investment for a monthly investment is Rs. 500
  2.  No obligation of repeat investment in the same fund every year
  3.  No maturity/redemption obligation on completion of 3 years (unless specified by the   fund/scheme), can withdraw anytime once the lock-in period is over
  4.  It can be held as long as the investor wants, giving it a chance to build long-term wealth
  5.  The fund is managed by able fund management teams
  6.  Low fee structure and expenses, about 2-2.5% yearly
  7.  No long term capital gain tax
  8.  Investor has an option to choose between dividend or growth fund
  9.  The dividend earned on these funds are taxed at 10%
  10.  SIP method of investing would help in cost averaging

Some point of concerns –
As it is a pure equity investment, it carries market risks, highly volatile. The SIP mode of investment signifies each purchase will have a separate lock-in period of 3 years. However, it is still recommended as a wealth creator tool. 

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Top 7 #Taxsaver #ELSS schemes for 2019

ELSS SchemesAUM in croreReturns for 3 YearsReturns for 5 yearsRatings
#DSP-BR Tax Saver Fund142025.520.85star
#Reliance Tax Saver557929.221.33star
#Axis Long Term Equity Fund995624.121.63 star
#Birla SL Tax Relief 96230824.119.84star
#Franklin India Tax Shield219622.917.93 star

I have listed 7 top ELSS scheme based on 5 parameters–

1. Funds with over 7 years existence

2. AUM over Rs. 1000 crore

3. Fund house

4. Return analysis over 5 years

6. SIP Return of 5 years

5. Rating consistency by CRISIL/ Value Research

#DSP-BR Tax Saver Fund

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This fund is out an out consistent over last 10 years. It has consistently beaten the index over 1 year, 3 year, 5 years return. This fund has out ranked most other funds in ELSS category in the period. Investment details – The fund aims to generate medium to long-term return on majority investment in equity and equity related instruments.The fund has over 20% exposure in banking and finance sector however invested mostly in private sector banks, so less chance of getting affected by NPA. It has some quality cyclic stocks.

#Reliance Tax Saver Fund

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ELSS fund with over 10 years existence, AUM over 5.5 thousand crore comes from a good pedigree. Rated 3 stars by CRISIL, the fund has beaten indices over 3 years and  5-year trailing returns. In the 1 and 2 year category, has been below the indices in many cases. It is a good investment with high-risk appetite. It has also given the highest return in the SIP for 10 years category. Investment details – This is a mid-cap, small-cap heavy fund, aims to generate wealth over long term. Fund manager looks for value buy of stocks with bottom-up stocks picking approach. The portfolio is well-diversified and spread across sectors. 

#Axis Long Term Equity Fund

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With an AUM over 9,900 crores as of 20th Jan 2017, it leads the ELSS scheme in the top position. It has lagged in last 1 year in comparison to its peers and indices, but over 3 years, 5 years returns it is in the top 5 ranks. 

Investment details – The scheme aims to generate regular long-term capital growth from a diversified portfolio of equity and related securities. It invests in companies with strong growth and sustainable business model. It has equity exposure up to 95%, given some trailing returns in the short-term but expected to even out over long term. It is still a good choice. It avoids buying companies which have excessive business uncertainty on account of cyclical, regulatory, political risks.

#Birla Sunlife TaxRelief 96   

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A fund with good pedigree has a defined track history over20 years has a AUM of 2.3 thousand crore belong to good fund pedigree. In last 1year, it is trailing the index. While in 2, 3, 5 years returns, it has beaten indices return with significant margin. It has generated over 100% return over years. Investment details– It is a multicap fund with well-diversified portfolio. However, fund has a cyclical stock bias, which has its own effect on return cycles. Well diversified in its approach, the top 5 holdings only account for 26% of the portfolio.

#Franklin India Tax Shield

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A fund with a track record over 7 years has been at par with index returns for 1 year and for over 2,3 and 5 years it has performed well above indices. This fund tends to be less volatile compared to its peers. Investment details– The process of the fund house is robust. This fund is known for having conservative approach, bottom-up style of stock picking and having growth style of investing. The fund with a large-cap bias which accounts for almost 60% of the portfolio has a 25% exposure in mid-cap, small-cap category.  Well diversified in portfolio construction, the top 5 holdings accounts for only 26% of the portfolio. 

Don’t break your head over minute investment return details, it is a game of sector allocation, Mkt-cap of companies and economic cycles. Choose a fund with a basic research and your investment style as criteria. #ELSS is nothing but an equity mutual fund and over long-term it is expected to give good returns, which also provide #tax benefits under income tax act, section 80C. However, it is advised to consult a professional financial planner before investing.

Dynamic asset allocation funds

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