Aditya Birla Sun Life ESG Fund
This is a thematic fund. The fund will invest in companies following the Environment, Social & Governance (ESG) theme. The NFO period has started from Dec. 4 and will close on Dec. 18. Aditya Birla Sun Life Mutual Fund has partnered with ESG research provider â€˜Sustainalyticsâ€™ for ESG scores and ratings which will be the filter for defining the stock investment universe. The fund will be market cap agnostic.
Thematic funds cannot be part of the core portfolio. You should invest a maximum of 10% in all the thematic funds. Do not expect ESG funds to out-perform in the short-term.
Axis Special Situations Fund
This is another thematic fund. This will be an open ended equity scheme that follows a special situations theme focusing on disruptive growth opportunities. The investment area will be both domestic and global markets and across the market cap spectrum. Overseas investments will be advised by Schroder* (which is around 25% shareholder in Axis AMC). The NFO period started on Dec. 4 and will close on Dec. 18.
There is nothing special about special situations unless one is able to capitalize on them. Also, you know the standard disclaimer about thematic funds. It is better to see how the special situations fund works in live conditions, before taking a call. At a broad level, the definition of ‘special’ is loose and so a special situation can be anything. Entry and exit matters if special situations are time-bound.
HDFC Dividend Yield Fund
This open ended equity scheme will be predominantly investing in dividend yielding stocks. The NFO period started on Nov. 27 and will end of Dec. 11. The fund will be market cap and sector agnostic. Dividend yield is a good valuation indicator and companies that have high dividend yield represent good cash flow in business and management commitment towards shareholders. Also, such companies have a higher Return on Equity (ROE).
We agree that low interest rates make high dividend yield stocks attractive. Also, the current polarized valuations make high dividend yielding stocks attractive. But given the fact that dividend yield strategy in India, which is a fast-growing market, has low return potential just based on dividends, an investor has to hope that stock price appreciation happens as well in the dividend yield stocks in the MF portfolio.
ICICI Prudential QUANT Fund
This is an open-ended thematic fund which would predominantly invest in equity and equity related instruments selected based on a quantitative model. The NFO will close on Dec. 7. The success or failure of a quant fund depend on its mathematical model. There are only limited options in the Indian market when it comes to quant funds, which are a rage globally. In this context, the ICICI Pru scheme does widen the quant fund choice basket.
Unfortunately, the quant model of ICICI Prudential QUANT Fund is not as clear as we would want. It seems there is some amount of secrecy involved. The details provided in fund documents filed with SEBI give an overall picture, but is it not as detailed as some would want. In the absence of higher levels of clarity, it will be a leap of faith to invest in such a fund. Do note that quant funds have to be operated by human fund managers at the end of the day. Also, during extreme short-term market volatility, the tide is against quant funds.
UTI Small Cap Fund
UTI Mutual Fund has launched an open-ended equity scheme which will predominantly invest in small cap stocks â€“ â€˜UTI Small Cap Fundâ€™. The New Fund Offer opened on Dec. 2 and will close on Dec. 16.
Smallcap funds require an investment horizon of 5-7 years at the minimum because smallcap stocks do take about 10 years to become midcap and then largecap stocks. The expansion of the cap size coincides with large stock price returns. Smallcap funds historically have given the best returns among all categories over the long-term. In the short-term, they are prone to higher volatility. They are a good addition to an investor portfolio only if the core of the portfolio has been formed with largecap and midcap funds, or flexicap/multicap funds.Â
Note: If you want to invest in NFOs, you can reach out to the team at Wealthzi onÂ [email protected]Â or open an account atÂ https://www.wealthzi.com