NFO: Edelweiss Mutual Fund launches Focused Equity Fund
It is an open-ended equity fund that will invest in 25-30 stocks across market capitalisation.
Edelweiss Asset Management Ltd has launched a new fund offer (NFO) named Edelweiss Focused Equity Fund. The fund opened for subscription on July 12 and will be open till July 25. It is an open-ended equity fund that will invest in 25-30 stocks across market capitalisation. It’s a multi-cap portfolio that will follow a benchmark and sector-agnostic approach. This fund will allow investors to have exposure in 3 timeless opportunities:
1) Brands: Buy established and emerging brands across B2B and B2C segments.
2) Market share gainers: Buy market-share leaders and emerging market-share gainers.
3) Innovators: Buy innovators, adaptors and enablers of change in business dynamics.
Edelweiss Mutual Funds, managed by Edelweiss Asset Management Ltd., is one of the youngest mutual fund houses in the country. Currently EAMC offers a portfolio of 84 funds to its investors. Their total AUM stands at Rs 81,126 crore as of end March 31, 2022.
What are Focused Equity Funds ?
Focused Equity Funds are equity mutual funds that invest at least 65% of their total assets in equities and equity-related instruments and can have a maximum of 30 stocks in their portfolio. They can invest across market capitalisations, sectors, and industries. The portfolio comprises high conviction stocks with higher weights. Thus, the return potential of such funds is likely to be very high over the medium to long term.
Edelweiss Focused Equity Fund has an investment objective of generating long-term capital appreciation by investing in Equity and Equity-related instruments. Also the scheme has no entry load while there is an exit load of 1% upto 365 days and NIL after 365 days.
The minimum investment amount for this Fund will be Rs 5000/- and in multiples of ₹ 1/- thereafter through the lump sum mode. You can start an SIP in the fund with as low as Rs 500 per month. Benchmark: Nifty 500 TRI.
Now many investors ask why we invest now?
The reason behind this is:
· India is set to see the best decades of the business growth and transformation.
· Rising income is changing consumer preferences towards better brands.
· Strong businesses are becoming stronger due to shift towards organised sector.
· Rise in internet users is enabling innovation and disruption across many sectors.
The main reason is that in today’s world everyone is running after brands and Strong brands create higher shareholder value and are biggest wealth creators.
Likewise, this fund will invest in established brands with dominant position, huge scope in the underpenetrated market, and have steady earnings youth. For instance in stocks like Havells, Infosys etc.
It will also invest in emerging brands that that are showing performance and growth, and have a potential of earning growth along with re-rating. For instance, V-Guard, Persistent and Kansai Nerolac.
In last 5 years these brands have given strong revenue growth between 9-18% and a Market Cap growth upto 31%.
Also Market share gainer drives Shareholder value and providing benefits like increasing market share, higher growth than sector, better operating leverage, promising return ratios and margins, and higher shareholder value.
These market share gainers are the long term compounders and the fund will invest in consistent market share gainers and emerging market share gainers. These show the higher market cap growth in last 5 years.
Also, innovators are new wealth creators. They disrupt old business model and creates new eco-system.
Now let us know what are their Investment Philosophy:
Forensics: Use forensic framework to check accounting quality, board governance standards and ownership.
Acceptable price: Focus on reasonably priced businesses with medium-term earnings power rather than short term.
Robustness: Having superior return on capital employed.
The asset allocation of the scheme:
· Equity and Equity related instruments: 65% – 100%
· Debt and money market instruments: 0% -35%
· Units of REITs & InvITs: 0% – 10%.