New Fund Offer Archives

NFO review: ICICI Prudential Alpha Low Vol 30 ETF FOF is open for subscription

ICICI Prudential Mutual Fund has announced the launch of ICICI Prudential Alpha Low Vol 30 ETF FOF, an open-ended FOF scheme investing in ICICI Prudential Alpha Low Vol 30 ETF. The offering aims to provide returns before expenses that closely correspond to the total return of the underlying index, that is, Nifty Alpha Low Volatility 30 TRI, subject to tracking errors.

NFO period
The New Fund Offer (NFO) opened on September 01, 2021, and will close on September 15, 2021. The benchmark for this FOF is Nifty Alpha Low Volatility 30 TRI.

About NFO
Multi-Style Factor based funds, also known as Smart Beta Strategy funds, are gaining popularity among investors globally for the synergies of benefits it has to offer in terms of enhanced diversification, reduced volatility, alpha generating opportunities, etc.
ICICI Prudential Alpha Low Vol 30 ETF FOF provides investors exposure to a combination of alpha generation opportunities with reduced volatility by investing in ICICI Prudential Alpha Low Vol 30 ETF.
This multi-style factor exposure endeavors to provide growth with stability to its investors. Investors looking to create wealth over long-term via multi-style factor strategy may opt to invest in ICICI Prudential Alpha Low Vol 30 ETF FOF, says Chintan Haria, Head- Product Development & Strategy, ICICI Prudential AMC.

What the product gives to investors
Through this FOF, investors can access a portfolio of stocks from various sectors, based on top combination of alpha and low volatility. It intends to counter the cyclical theory of single factor index structure strategy. While investing through FOF, an investor without a Demat account too can invest in an ETF through lump sum or SIP.
Why should investors consider ICICI Prudential Alpha Low Vol 30 ETF FOF
The fund provides exposure to multiple factors through a single index product. The product can counter the cyclicality of single factor index strategy. The fund allows people without a demat account to invest in an ETF through lump sum or SIP. This is a smart and low cost opportunity to invest in large and midcap companies.
Smart beta ETF that invests in low volatile companies/stocks that can help is generating alpha. Plus, the fund can exhibit less performance swings due to index nature of low volatility.

About the underlying index
The Nifty Alpha Low Volatility 30 index comprises 30 stocks selected from Nifty 100 and Nifty Midcap 50. The weights of the stocks are derived from alpha and low volatility factor scores with individual stock weight capped at 5%. The index methodology is factor weighted and re-balanced semi-annually.
The top three sectors in the index are Consumer Goods (40.8%), IT (21.6%) and Pharma (16.8%). The index has outperformed the broad market indices 8 out of 11 times until 2020. Data Source: MFI Explorer. Data as on August 18, 2021.

Note: The new fund offer of ICICI Prudential Alpha Low Vol 30 ETF FOF is available for investing on Wealthzi.com.

5 factors that helped ICICI Pru Flexicap Fund NFO collect about Rs 10,000 crore

The NFO saw participation from 4 lakh retail investors and 15,000 distribution partners.

The previous record for highest-ever collection by open-ended equity fund was held by Reliance Natural Resources Fund, which had collected around Rs 5,660 crore.

Let us look at the 5 key factors that drove ICICI Pru MF’s mammoth fund-raising.

1. Flexicap freedom

ICICI Pru Flexicap has a market cap allocation plan of 50-100 per cent for large-caps and 0-50 per cent for mid- and small-caps. But as per its model, the fund may start with 75-80 per cent in large-caps and the rest in mid- and small-caps. From a risk-reward perspective, flexicap funds fall in the middle of the diversified space (moderate) compared to multicap funds. Flexicap funds offer low potential risks relative to investing more in mid- and small-caps. The new flexicap fund offers higher large-cap exposure i.e. more perceived safety at all times.

2. Distribution muscle

ICICI Prudential MF has ICICI Bank has its sponsor, the other one being Prudential. ICICI Bank has arguably one of the most potential distribution platforms in the country. For this NFO alone, 15,000 distributors actively helped. ICICI Bank has over 5,000 branches. That apart, ICICI Pru MF has an investor base of over 7 million. All this mean that selling the NFO through these platforms can bring big results and that has showed up in this NFO case.

3. Switches from existing ICICI Pru funds

Another factor that may have played a big role in the ICICI Pru Flexicap collection are the switches from ICICI Pru MF funds. NFOs usually allow existing investors to switch money between schemes. This may have happened in this case. For the AMC, this ensures two things. One, the NFO gets more money. Two, the assets under management stays in the same AMC instead of going out in the case of redemptions. Given the freedom in the flexicap model, it would have been easier to convince new and existing investors to pump money in the NFO. Typically, thematic NFOs are riskier. But a flexicap structure is much more safe.

4. Track-record

The scheme is being managed by Senior Fund Manager Rajat Chandak and overseas investments will be managed by Fund Manager Priyanka Khandelwal. ICICI Prudential Mutual Fund has one of Indiaâ€™s largest and experienced investment and research team led by S Naren, who is well known for his calls on macros and market cycles. While Naren has beeen around for a long time, in terms of his investment calls he has been a legend of sorts. He called the 2008-09 crash correctly. Over the last 2 decades, the fund-house by the dint of its reputation has garnered Rs 4.3 lakh crore across nearly 70 schemes. So, this would have given an additional comfort to Flexicap fund new investor.

5. FOMO

Indian markets have been performing well. Valuations are no longer cheap. However, stock markets have not corrected despite what naysayers have said. When the Sensex crossed 50,000, people expected markets to crash. That didn’t happen. Covid, slowdown, Fed rate hike, oil prices…almost everything has been hurled at the bulls but markets have stayed their course. Today, the Sensex is pushing 53,000. Hence, Fear Of Missing Out – FOMO – is extremely high. FOMO has played out many times. Yet, many investors have tried to remain sidelines. Thus, when a fund-house with a good vintage comes with a reasonably sound investment strategy in a flexicap fund structure, it is natural that investors suffering from FOMO will try to go all out.

ITI Value Fund NFO opens for subscription

ITI Mutual Fund has launched its latest offering: ITI Value Fund. At a time when markets are scaling new highs, it is pertinent to note that ITI MF is the only fund-house to launch a value investing oriented product. The value funds category is dominated by schemes such as ICICI Pru Value Discovery, L&T India Value, Invesco India Contra, UTI Value Opp. and Tata Equity PE. ITI MF has a deep connection with two of the biggest value funds and it remains to be seen whether IT Value Fund can get closer to that glory in future. Read on to know more about it.

Why invest in value funds

Value funds generate returns from potential rerating and earnings growth.

They participate in turnaround success of companies that may be out of favour.

Value funds adopt a disciplined approach during volatility with cash.

A high margin of safety means that relative downside is limited and upside is high.

Value funds are long-term bets. So, do not look at 1-2 years returns. It is better to look at their returns on a 5-year basis or more. You can do SIPs in value funds with money that you do not need in 5 years. Sometimes, value funds may take longer than 5 years to show good returns.

Value funds should form the satellite part of your portfolio. Satellite portion is about 10-20 per cent of the overall portfolio. Those with higher risk appetite, can obviously take larger positions.

Where value funds invest

Value funds like ITI Value bet on great companies going through temporary tough times and trading at prices significantly below their intrinsic value.

They focus on stocks where deleveraging and improvement in RoEs/cash flows visible.

Value funds also take positions in emerging sectors with growth potential available at significant value.

Its a game of patience. ITI Value Fund may continue to retain the stock in the portfolio as long as fundamentals are intact and valuation is reasonable.

Fund managers and CEO

Pradeep Gokhale joined ITI Asset Management Ltd. in November 2018. He has over 23 years of extensive experience in Fund Management, Equity Research, Credit Evaluation and Ratings. He has been associated as a Key Management Personnel at Tata Asset Management Ltd. for 15 years and his last role was in the capacity of Senior Fund Manager â€“ Equities. Pradeep managed Tata Equity PE, a very popular value fund in his stint at Tata MF.

CEO George Heber Joseph joined ITI Asset Management Ltd. in November 2018 and is responsible for the entire business of ITI Asset Management Ltd. Prior to joining ITI Asset Management Ltd., he has worked in companies like ICICI Prudential Asset Management Ltd. At ICICI Pru, George managed ICICI Prudential Value Discovery Fund, the biggest value fund in MF space.

ITI Value Fund features

ITI Value Fund will have top down sector allocations based on macro drivers.

The fund will have stock level limit in a way that it is 7% – Large Caps, 5% – Mid Caps, and 3% – Small Caps at the time of purchase.

The ideal investment horizon is 3 â€“ 5 years.

The fund will deploy value investing strategy across market caps.

A strong bottom up stock selection approach is expected to focus on price-value gap, leading to better payoffs.

ITI Value Fund opened for NFO subscription on May 25 and will close on June 8. After a few days, it will reopen for ongoing subscriptions.

ABSL Nifty 50 EW Index Fund NFO offers equal weight investing

Aditya Birla Sun Life Mutual Fund (ABSLMF) has launched Aditya Birla Sun Life Nifty 50 Equal Weight Index Fund, an open ended scheme tracking the Nifty 50 Equal Weight TR Index. The NFO opened on May 19, 2021 and closes on June 2, 2021. This is a unique fund and this sub-type of funds is very limited presently. Let’s know more about it

What’s special in an index fund

Most people would think there is nothing unique about an index fund. But this equal weight index fund is different.

All constituents of the Nifty 50 Index are part of the Nifty 50 Equal Weight index. But unlike Nifty 50 which is based on market capitalisation and higher the market cap of a company higher the weightage of the stock in the index, the equal weight index treats all of them equally irrespective of their relative market cap.

This approach means the index keeps the allocation of the constituent companies at ~2% each. As a result there is broader sectoral representation and more diversification at a stock level. This reduces the concentration risk significantly at an individual stock and overall sector level.

Also, profits are pronounced. Nifty 50 stocks like JSW Steel, Tata Steel, Tata Motors gave over 200% return over the last year. Their combined weightage in Nifty 50 is only ~2.5% as compared to ~6% in the Nifty 50 Equal Weight index.

The index is automatically re-constituted every 6 months in line with the Nifty 50, allowing for natural selection of top movers. Additionally, the portfolio is rebalanced on a quarterly basis, leading to smart and periodic profit booking. The way it works is, since each stock is to have a 2% allocation, if any stockâ€™s allocation increases as a result of market action then on the rebalancing date, the excess percentage of the stock will be sold leading to an automatic profit booking. The proceeds will be re-invested into stocks which have fallen and have less than 2% allocation.

Fund-house speak

Commenting on the launch of the new fund, A. Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC Limited said, â€œEqual allocation to the 50 large cap companies can benefit from growth opportunities across the board rather than relying on the performance of few heavyweights. With a period of broad based economic recovery on the anvil, high growth sectors like cement and cement products, pharma, metals and services, are better represented in the Nifty 50 Equal Weight Index.”

Over time, as markets and economy grow, Bala expects the Equal Weight (EW) Index to do better than Nifty 50. It has outperformed the Nifty 50 over short and long term periods. For e.g., in the last year ended May 4, 2021, the Nifty 50 Equal Weight Index has outperformed Nifty 50 Index with 21.9% returns against 15.2%, over short and long-term.

Infact some of the stock level polarisation in the base index that we saw in 2018-19 is already reversing sharply.

Why you should invest

In the above backdrop, Aditya Birla Sun Life Nifty 50 Equal Weight Index Fund is an intelligent and simple investment option that provides opportunity to capitalise on broad based economic growth in the country.

The fund will provide portfolio exposure to high growth potential of equity sector by investing in the Top 50 large cap companies on the NSE.

Equal weightage makes for a more diversified portfolio â€“ reducing concentration and sectorial risk for investors.

Equal weightage gives uniform opportunity to all stocks in the portfolio to shine in times of growth.

â€˜Smartâ€™ investing strategy allows for periodic booking of profits in stocks that have grown and the proceeds will be re-invested into stocks which have fallen & have less than 2% allocation.

Apart from the ABSL fund, the equal weight index fund has 3 other options: Principal Nifty 100 Equal Weight Fund, DSP Equal Nifty 50 Fund and Sundaram Smart NIFTY 100 Equal Weight Fund.

Parag Parikh Conservative Hybrid NFO: A tax-efficient alternative to fixed income

PPFAS Mutual Fund has announced the launch of Parag Parikh Conservative Hybrid Fund. The scheme aims to generate regular income through investments predominantly in debt and money market instruments. It also seeks to generate income and capital appreciation by investing a certain portion in equity, equity-related instruments, and Real Estate Investment Trusts / Infrastructure Investment Trusts (REITs/InvITs). Read on to know more details.

About the NFO

Parag Parikh Conservative Hybrid NFO opens May 7, 2021 and closes May 21, 2021.

The minimum investment shall be Rs 5,000 and in multiples of Re 1 thereafter. The scheme will reopen on May 28, 2021 for normal investments at prevailing NAV.

The performance of the scheme will be benchmarked against CRISIL Hybrid 85+15 â€“ Conservative Index TRI. Rajeev Thakkar, Raunak Onkar and Raj Mehta will manage the scheme.

Both Direct and Regular Plans will offer Growth and Income Distribution cum Capital Withdrawal Options.

Important notes

Parag Parikh Conservative Hybrid Fund is an attempt by the fund-house to emulate Parag Parikh Flexi Cap Fund on the debt side.

Parag Parikh Conservative Hybrid aims to be flexible and would try to take advantage of debt opportunities.

The fund’s asset allocation is 75-90% in debt securities (including securitized debt) & money market instruments, 10-25% in equities & equity related instruments and 0-10% in units issued by REITs and InvITs.

For an investor, the fund will cost 0.60% per annum in regular plan route and 0.30% in direct plan route.

How hybrid, how conservative

The fund is ‘conservative’ in the sense that most of the corpus is invested in a mix of accrual and duration instruments without taking on excessive credit or interest rate risk.

The fund is ‘hybrid’ owing to the inclusion of two asset classes within one scheme.

Investment strategy

Debt/fixed income – The fund has a relatively wide mandate permitting it to include both, â€˜accrualâ€™ and â€˜durationâ€™ related instruments in portfolio. These include Sovereign, State Government, PSU and corporate securities across all maturities.

Equity – The fund will prefer stocks with strong cash flows (higher dividend payout/buybacks) Focus on choosing stocks possessing a ‘margin-of-safety’. It will aim to avail of ‘special situations’ whenever they arise.

REITs & InvITs – The fund wants to use these assets to fight inflation via annual rental increments.

Fund-house speak

Neil Parag Parikh, Chairman and CEO, PPFAS Mutual Fund said, “The idea is to have a flexible model where we have the freedom to take advantage of market opportunities without being too constrained. Thus, the scheme will not be boxed into any particular type of debt like short term, government bond or high yield. Parag Parikh Conservative Hybrid Fund will be our debt fund offering with a slice of equity exposure, REITs and InvITs. The scheme could be considered as a ‘one-stop shop’ for your debt needs.”

About the scheme’s investment strategy, Rajeev Thakkar, Chief Investment Officer, PPFAS Mutual Fund said, “The scheme will adopt a flexible model that will allow the fund manager to move between accrual and duration related instruments. These include the sovereign, State Government, PSU and Corporate securities across all maturities. The fund will have 10 to 25% exposure in equity and equity-related instruments. The allocation can be increased or reduced using arbitrage.”

Exit load

While no exit load will be levied for the 10% of units from the date of allotment, however, 1% load will be applicable if redeemed within one year from the date of allotment for the beyond 10% of the units. No exit load will be levied if redemption is made after 1 year from the date of allotment of units.

Investor takeaways

For investors in Parag Parikh Conservative Hybrid Fund, the debt allocation has the potential to provide investors with a regular income – in the form of rent or dividend. The non-debt portion has the potential to grow in the Net Asset Value owing to changes in the market-price of the underlying assets over a period of time.

Such a fund is ideal for those desiring diversified asset allocation within one scheme, and who want to avoid a fund that is into active trading in debt securities at every movement in interest rates.

The fund will be taxed like any other debt fund. This means long term capital gain tax will be 20% with indexation, plus surcharge and cess for units sold after holding for more than 36 months. Short term capital gain tax will be 30%, plus surcharge and cess for units sold after holding for less than 36 months.

Axis Healthcare ETF NFO: A passive play on a long-term wealth creating sector

Axis Mutual Fund has announced the launch of their new fundâ€“ â€˜Axis Healthcare ETFâ€™. The new fund offer (NFO), which will open on Friday, April 30, will allow access to investors in the Healthcare sector in a neatly packed bite-sized exchange-traded fund.

Unique play

So far, the only way offered to play the pharma/healthcare sector was actively managed funds. The biggest ones among them are Nippon India Pharma, ICICI Pru Pharma Healthcare & Diagnostics, SBI Healthcare Opportunities, Mirae Asset Healthcare and DSP Healthcare. This category of funds have given an average CAGR of 12 per cent in last 5 years and an average CAGR of 16 per cent in 10 years. But be warned, these are historical returns. Any sectoral play requires entry at the right price, waiting and then exit at the right price. So, such funds must only be a part of satellite allocation in your portfolio.

Now, Axis Healthcare ETF offers a passive way to play the healthcare sector wealth creation opportunity. The open-ended exchange traded fund will be tracking NIFTY Healthcare Index. This means there will be no fund manager led stock selection.
The Nifty Healthcare Index, started in November-2020, comprises a maximum of 20 stocks that are listed on the National Stock Exchange. The top 10 biggest stock weights are Sun Pharma (15.31%), Dr. Reddy’s Laboratories (13%), Divi’s Laboratories (10.95%), Cipla (9.82%), Apollo Hospitals Enterprise (6.93%), Aurobindo Pharma (5.88%), Lupin (5.82%), Biocon (4.31%), Laurus Labs (3.27%) and Ipca Laboratories (3.09%). Expect the index to fall less than the Nifty because of a correlation of 0.67 and a beta of 0.57.
There is also a passive product called Edelweiss MSCI India Domestic & World Healthcare 45 Index Fund, which is a combination of domestic-international healthcare plays. This is a relatively new fund launched in October 2020.

About the ETF

Axis Healthcare ETF will be managed by Jinesh Gopani, Head â€“ Equity, Axis AMC.

The new fund offer is ideally suitable for investors who are seeking, long-term wealth creation solution through targeted sectoral exposure to the healthcare sector. With an ETF route, the fund will aim to track returns by investing in a basket of NIFTY Healthcare Index stocks with an aim to achieve returns of the stated index.

The index on the face of it seems domestically focussed. Indiaâ€™s Healthcare industry has achieved global recognition for its capabilities and strong knowledge base and has strong continued growth potential.

Passive investing in India has gained quite the momentum, either through index funds or exchange-traded funds. It is a low friction investment strategy tracking a specific index as closely as possible. The passive approach of replicating benchmark also leads to a stable portfolio with limited turnover.

Current sector universe may add limited scope to active management and hence a sector ETF can add value at low cost, claims the fund-house.
Since this is a new ETF, keep a watch on trading frequency on the exchange, its impact cost, tracking error and any deviation between ETF NAV and ETF market price.

About ETFs in general

Apart from being cost effective, ETFs let investors invest at real-time prices as opposed to end of day price by sector funds. It protects their investments from the inflows and outflows of short-term investors.
Furthermore, ETFs are best suited to earn asset-class linked performance and is touted to be one of the most flexible tools for gaining instant exposure to the markets, thereby equitizing cash.

Fund-house speak

On the launch of the NFO, Chandresh Kumar Nigam, MD & CEO, Axis AMC, said, â€œOur ETF strategy relies on offering highly innovative yet relatable products to our target investors and we have already seen a number of launches in this space in the last year. The launch of Axis Healthcare ETF continues to take forward our endeavour to build up our passive product suite over time and towards our target of being the preferred manager to investors across the entire spectrum of active and passive products.â€

Minimum investment

Minimum Investment in Axis Healthcare ETF (NFO) is Rs. 5,000 and in multiples of Rs.1/- thereafter.

The ETF benchmark is Nifty Healthcare TRI Index

NFO dates: April 30, 2021 to May 10, 2021

Axis AAA Bond Plus ETF NFO opens today; should you invest?

Axis Mutual Fund, one of the fastest growing fund houses in India, has announced the launch of their new fund offer â€“ â€˜Axis AAA Bond Plus SDL ETF 2026 Maturityâ€™. It is a target maturity ETF â€“ a portfolio, specifically designed to terminate at a pre-defined date â€“ that will invest in a portfolio of high quality debt instruments. The new fund offer (NFO) opens for subscription from April 23, 2021 to May 7, 2021. Given that this is a new product, here is a primer on the product. Read on.

What is Axis AAA Bond Plus SDL ETF – 2026 Maturity

This is an open-ended Target Maturity Exchange Traded Fund investing predominantly in constituents of Nifty AAA Bond Plus SDL Apr 2026 50:50 index.

An ETF is a mutual fund designed to track the performance of an index. This is achieved by closely replicating the portfolio of the underlying index. ETFs trade in bite sized units on an exchange at market determined prices. While traditionally in India it is the equity and gold ETFs that have been popular, debt ETFs are fast making a space for themselves. Debt ETFs offer investors a great combination of stability and liquidity.

The benchmark index has a maturity date of April 30, 2026. Further the composition of the benchmark is an equal allocation towards AAA securities and SDLs, thus offering investors with a very high credit quality and diversified portfolio.

How does a target maturity ETF work

A target maturity ETF is a portfolio designed to terminate at a predefined date.

The fund manager achieves this by buying securities with similar maturities as close to the defined maturity date and holds them to maturity.

As time passes, the ETF may add securities that meet the methodology criteria. As the ETF progresses the duration of the securities diminishes until the fund matures.

Thus, the strategy aims to negate any duration risk for investors who remain invested through the life of the ETF.

Why this product now

5 year yields have seen the maximum retracement since December 2020.

The run up in yields has resulted in the spread between 3 year AAA & 5 Year AAA papers trade at its highest level in 2 years.

Even for investors with a longer investment horizon the 5 year space is a compelling alternative since 5 year levels are trading at levels similar to comparable 10 year instruments.

High quality SDLâ€™s also offer significant opportunities given that they trade at levels higher than AAA â€“ PSUâ€™s currently.

According to the fund-house, current yield levels provide adequate buffer for even shorter term investors.

What about the debt index

Nifty AAA Bond Plus SDL Apr 2026 50:50 Index is a portfolio of AAA rated bonds issued by government owned entities, HFCs, Corporates and State Development Loans (SDLs) maturing between May 01, 2025 to April 30, 2026. The index will be managed by NSE Indices Limited.

AAA rated bonds include those belonging to HDFC Ltd, REC Ltd, Indian Oil Corporation, Power Finance Corporation Ltd, Export Import Bank Of India and NTPC Ltd.

SDLS include those belonging to Gujarat Government, Karnataka Government, Maharashtra Government, Tamil Nadu Government, West Bengal Government and Uttar Pradesh Government.

Who is this product for

Axis AAA Bond Plus SDL ETF – 2026 Maturity will facilitate passive investing for debt investors by offering them a fund that has defined tenure close to 5 years.

The fund can be used by investors looking at a 5 year holding period but also by investors that want to take advantage of this strategy for shorter holding periods.

Thus, the Axis AAA Bond Plus SDL ETF – 2026 Maturity is a low-cost, hassle-free solution for investors looking to build their fixed income portfolio.

Top features of the fund

1. Opportunity â€“ The 5 Year AAA space is offering an interesting opportunity given the selloff since December 2020.

2. Core Allocation – Ideal solution for investors looking to invest with a 5-year investment horizon

3. Product Mechanism – Low cost hassle free solution for investors looking to build their core fixed income portfolio

4. Simple and Easy – Exchange traded, high quality portfolio with the benefit of 5 yearsâ€™ indexation

Fund-house speak

On the launch of the NFO, Chandresh Kumar Nigam, MD & CEO, Axis AMC said, â€œWe want to develop, introduce and provide the products that are relevant in the current context. Accordingly, we recognize the need to offer investors a choice of strategies including robust passive products across all asset classes. The launch of Axis AAA Bond Plus SDL ETF – 2026 Maturityâ€™ continues to take forward our endeavour to build up our passive product suite over time by offering investors an attractive debt strategy within the passive space.â€

NFO: SBI International Access – US Equity FoF opens from March 1

SBI Mutual Fund is launching its first international fund offering on March 1, 2021. The countryâ€™s largest fund house’s new fund offer is called SBI International Access – US Equity FoF. The fund of fund will invest in its joint venture partner Amundi Fundsâ€™ US Pioneer Fund (domiciled in Luxembourg), which invests predominantly in US market securities. Let’s find out more details about the product.

About the new FoF

Investors putting money in SBI International Access – US Equity FoF will see the funds being fed into the Amundi Funds – US Pioneer Fund which is domiciled in Luxembourg.

According to a presentation from SBI MF, the underlying fund has delivered returns of 16.27 per cent (CAGR) in euro terms, beating its benchmark S&P 500 Index return of 16.16 per cent (as of 31st January 2021). The underlying fund has a size of $2.5 billion.

SBI International Access FoF may also invest in other mutual funds/ ETFs domiciled overseas and invest predominantly in US markets. The scheme will be benchmarked to the S&P 500 index after converting it to Indian Rupee.

The advantages of investing outside India includes international diversification, lower correlation and currency depreciation. Also, the new fund is supposed to be a US concentrated fund with some bias for value.

The minimum investment will be Rs 5,000. The fund manager is Mohit Jain.

About the underlying Amundi fund

Amundi Funds – US Pioneer Fund is the underlying main scheme. It seeks out high-quality, attractively priced companies trading at below their intrinsic value.

The underlying fund’s top five sectors by exposure are Technology, Financial Services, Consumer Cyclicals, Industrials and Healthcare.

In terms of top stock holdings, the fund’s five biggest are Apple, Amazon, Visa, Microsoft and Alphabet (Google parent).

How is SBI International Access – US Equity FoF different

SBI International Access – US Equity FoF is the fund overseas fund of funds in SBI MF. This is more of a passive investment option.

Some of SBI MF’s domestic schemes such as SBI Focused Equity already invest a part of their portfolio in international stocks. But, that’s a small exposure compared up to 100 per cent allocation in the new fund.

SBI MF also offers an indirect way linked to overseas companies. This is done by SBI Magnum Global Fund which does active management of investments in diversified portfolio comprising primarily of MNC companies. MNCs are all globally controlled.

Watch out for

The funds and schemes that FoFs invest in have their own expense ratios. Combine it with the expense ratio of the FoF, and you are looking at an expense ratio that is higher than standard expense ratios of equity schemes.

FoFs are for long term. So, consider investing if you have at least 5 years. Also, FoFs should be part of your satellite allocation.

Invesco India ESG Equity Fund NFO details; should you invest?

Invesco Mutual Fund is throwing its hat in the Environmental, Social and Governance (ESG) thematic fund space with a new fund offer (NFO). Invesco India ESG Equity Fund NFO, an actively managed equity scheme investing in companies following ESG theme, will open for subscription on February 26 and close on March 12. This will be the 10th fund in the ESG segment. Read on to know more details about investment strategy and ESG fund suitability for your portfolio.

ESG – What it is all about

Climate change, burgeoning pollution, resourceâ€™s scarcity, inequality, among others are some of the defining issues of our time. Some companies are increasingly focusing on ESG initiatives as businesses face a new set of challenges in todayâ€™s socially conscious economy.

With risks emanating from the environment, social and governance (ESG) factors are increasing; it is important to assess where the company faces risk on account of ESG parameters as ignoring these risks can have far reaching consequences, including impact on the shareholder value.

ESG issues can impact companyâ€™s positioning and have financial impacts. In the past, continuity of several businesses has been risked due to disregarding ESG practices, which in turn impacted their business operations, reputation and the shareholder value.

Invesco India ESG Equity Fund

The new fund will ultimately buy 30-40 stocks and hope these ESG compliant shares will appreciate over time. The selection of the 30-40 stocks will be done on the basis of ESG risk score evaluation of each company.

Companies involved in thermal coal extraction, unconventional oil & gas extraction (shale oil, shale gas, and Arctic drilling), power production based on coal, unconventional weapons (including nuclear weapons systems, biological weapons etc.), tobacco â€“ production & trading, and gambling are excluded from such a portfolio.

The portfolio will invest primarily in largecap stocks. There will be limited exposure to midcap and smallcap stocks, which may have 35 per cent allocation of overall portfolio.

The portfolio will be a blend of growth and value stocks.

Fund details

Plans/Options – Growth Option, Dividend Option

Minimum investment – Rs 1,000

Exit load – For any redemption / switch out in excess of 10 per cent of units allotted within one year from the date of allotment, there will be load of one per cent. If units are redeemed/switched out after one year from the date of allotment, there will be zero load.

Fund manager – Taher Badshah and Amit Nigam

Benchmark – NIFTY100 Enhanced ESG TRI

Problem with ESG investing

If investors turn towards environmentally-friendly or socially-friendly stocks, they push up the prices and lower their expected returns. Investors are saying that the choice has its own reward and expect that they are going to get higher returns from doing that but that may not really happen.

People may pay more for products that are produced in an environmentally friendly way but it is yet to be seen, over the long-term, if the same will pay more for stocks that belong to companies that stick to ESG principles. For instance, the NIFTY100 ESG index has a price to earnings of 40 times and price to book of 4.78 times compared to Nifty 100’s price to earnings of 36.9 times and price to book of 3.9 times (Jan-2021 end figures).

Suitability of ESG fund

ESG funds should not be a part of your core allocation. Hence, give them a place in your satellite allocation alone.

Both Axis and ICICI Prudential ESG funds can invest in global companies with high ESG scores. This adds another feature as well as risk to such funds.

There is not enough compelling evidence that the ESG theme is worth investing more than what you can give to a normal thematic fund (maximum 5 per cent).

In India, ESG funds are relatively new and hence should stand the test of time before they merit more seriousness.

NFO: Nippon India Asset Allocator FoF; details, how to invest

Nippon India Mutual Fund has launched Nippon India Asset Allocator FoF (Fund of Fund). The new fund offer has opened on January 18 and will close for subscription at offer price of Rs 10 on February 1 i.e. next month. We discuss the actively managed passive investment option. Read on.Â

Fund nature
Nippon India Asset Allocator FoF is an open ended fund of funds scheme investing in equity oriented schemes, debt oriented schemes and gold ETF of Nippon India Mutual Fund. So, please understand that the fund will invest in schemes of Nippon MF mainly.

Why asset allocation
History is replete with examples on how the performance of various asset classes and even sub asset classes keep changing over time.
Even the best of minds cannot always predict which asset class will do well.

In this backdrop, Nippon India Asset Allocator FoF is a solution. The scheme will invest across Equity oriented schemes, Debt oriented schemes and Gold ETF of Nippon India Mutual Fund with the help of an in-house proprietary model. This model decides allocation across Large Cap, Mid Cap, Small Cap, Short Term Debt, Long Term Debt and Gold ETF.

Markets change, need for dynamism
Markets are volatile. They go through ups and downs.Â
The Nippon dynamic framework uses a robust set of Macro, Micro & Market Indicators with an aim to deliver superior risk adjusted returns.

This ensures that you are always invested in the asset classes where the growth is most likely to be. Also, you are exposed to others to diversify risks.Â

Nippon India Asset Allocator FoF will go as per an asset allocation framework. It can invest minimum zero per cent in equity schemes and can invest maximum 100 per cent in equity schemes. This is same for debt schemes. For gold ETFs, minimum is zero per cent but maximum is 25 per cent. Money market instruments and liquid schemes exposure range will be 0 to 5 per cent.Â

Other scheme details
Nippon India Asset Allocator FoF scheme offers direct and regular plans. It will have Growth Plan and Dividend Plan (Dividend Payout Option and Dividend Reinvestment Option).

Direct Plan is only for investors who purchase /subscribe Units in the scheme directly with the fund (i.e. investments not routed through anÂ AMFI Registration Number (ARN) Holder).

Distribution of dividends will be subject to the availability of distributable surplus.

The scheme shall re-open for ongoing subscription and redemption on or before 15th February 2021.

The Minimum Application for NFO is Rs 5,000.
Minimum additional purchase amount is Rs 1,000.Â The scheme’s Benchmark Index is CRISIL Hybrid 50 + 50 â€“ Moderate Index.

Name of the Fund Manager -Â Prashant Pimple (Senior Fund Manager), Ashutosh Bhargava (Co-Fund Manager).Â

Exit load – 10% of the units allotted shall be redeemed without any exit load, on or before completion of 12 months from the date of allotment of units.Â

Any redemption in excess of such limit in the first 12 months from the date of allotment shall be subject to the following exit load.Â

Redemption of units would be done on First in First out Basis (FIFO): Exit load 1% if redeemed or switched out on or before completion of 12 months from the date of allotment of units.â€¢ Nil, thereafter

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