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  • Business
    PTI

    Business briefs

    <p>Aditya Birla Sunlife AMC launches new fund offer for multi-cap fund Mumbai, Apr 19 (PTI) Aditya Birla Sunlife AMC on Monday announced the launch of a new fund offer for a multi-cap fund that will be investing across large, mid and small-cap stocks.</p>

  • NFO analysis: HDFC Asset Allocator Fund of Funds
    Business
    Dalal Street

    NFO analysis: HDFC Asset Allocator Fund of Funds

    HDFC Mutual Fund launched HDFC Asset Allocator Fund of Funds (FoF) on April 16, 2021. This is an open-ended FoF scheme that seeks to invest in equity-oriented, debt-oriented & gold exchange-traded funds (ETF) while the funds’ asset allocation between the said asset classes would be dynamic in nature. The mix of equity, debt & gold would be decided, based on its in-house model that constitutes various valuation parameters such as price-to-equity (P/E) and price-to-book (P/B) ratios. HDFC Asset Allocator FoF is open for subscription up to April 30, 2021. It will again re-open within five business days of allotment of units under the new fund offer (NFO). Click here to access its scheme information document. Objective The objective of the scheme is to pursue capital appreciation by managing the asset allocation between equity-oriented, debt-oriented, and gold ETFs. Having said that, there is no assurance that the investment objective of the scheme will be realised or give guaranteed returns. Asset allocation Instruments Indicative allocations (per cent of net assets) Risk Profile Minimum Maximum High/Medium/Low Equity Oriented Schemes 40 80 Low to High Debt Oriented Schemes 10 50 Low to Medium Gold ETF Schemes 10 30 Medium to High The above asset allocation shows that at all times, it will not invest less than 40 per cent in equity and 10 per cent each in debt & gold. In fact, the SID of this fund also discloses the schemes that HDFC Asset Allocator FoF can invest in. Equity-oriented schemes: - HDFC Flexi Cap Fund - HDFC Top 100 Fund - HDFC Mid-Cap Opportunities Fund - HDFC Small Cap Fund - HDFC Growth Opportunities Fund - HDFC Capital Builder Value Fund - HDFC Focused 30 Fund - HDFC Dividend Yield Fund - HDFC Infrastructure Fund - HDFC Arbitrage Fund - HDFC Balanced Advantage Fund - HDFC Equity Savings Fund - HDFC Hybrid Equity Fund - HDFC Multi – Asset Fund - Equity ETFs/Index funds and/or other schemes of HDFC Mutual Fund or other domestic mutual funds having similar objectives, strategy, asset allocation, and other attributes. Debt-oriented schemes: - HDFC Liquid Fund - HDFC Overnight Fund - HDFC Ultra Short-Term Fund - HDFC Low Duration Fund - HDFC Money Market Fund - HDFC Short Term Debt Fund - HDFC Banking and PSU Debt Fund - HDFC Corporate Bond Fund - HDFC Credit Risk Debt Fund - HDFC Dynamic Debt Fund - HDFC Floating Rate Debt Fund - HDFC Gilt Fund - HDFC Income Fund - HDFC Medium Term Debt Fund - HDFC Hybrid Debt Fund - Other schemes of HDFC Mutual Fund or other domestic mutual funds having similar objectives, strategy, asset allocation, and other attributes. Gold ETF schemes: HDFC Gold ETF and other schemes of HDFC Mutual Fund, other domestic mutual funds have similar objectives, strategy, asset allocation, and other attributes. Benchmark The scheme is benchmarked against 90 per cent NIFTY 50 Hybrid Composite Debt 65:35 total returns index (TRI) and 10 per cent domestic prices of gold arrived, based on London Bullion Market Association's (LBMA) AM fixing price. Investment strategy The scheme will most likely allocate its assets between equity-oriented, debt-oriented and gold ETFs, based on prevailing market conditions. The fund manager will dynamically increase exposure to equity-oriented fund(s)/ETFs/index funds when market valuations are attractive and will tone down the equity exposure by increasing exposure in debt-oriented or gold ETFs, when equity markets get expensive or experience volatility or under any other conditions as the fund manager may deem fit. Fund manager This scheme will be co-managed by Amit Ganatra (Equity), Anil Bamboli (Debt) and Krishan Kumar Daga (Gold). Below are the details of each fund manager along with the performance of other respective funds managed or co-managed by them. Amit Ganatra Amit has collectively over 17 years of experience in equity research including around 9.5 years in fund management. He is working with HDFC Asset Management Company (AMC) since May 2020. Fund Trailing Returns (per cent) 1-Year 3-Year 5-Year HDFC Capital Builder Value Fund 63.50 5.22 11.67 HDFC Dynamic PE Ratio FoF 42.10 8.63 11.39 HDFC Multi-Asset Fund 42.50 9.60 9.69 HDFC TaxSaver Fund 52.06 3.96 9.97 Anil Bamboli Anil Bamboli collectively has over 25 years of experience in fund management, research, and fixed income dealing. He is working with HDFC AMC since July 2003. Fund Trailing Returns (per cent) 1-Year 3-Year 5-Year HDFC Banking and PSU Debt Fund 9.61 8.32 8.12 HDFC Dynamic Debt Fund 7.38 4.8 5.66 HDFC Dynamic PE Ratio FoF 42.1 8.63 11.39 HDFC Equity Savings Fund 26.65 6.85 9.85 HDFC Gilt Fund 7.33 7.34 7.23 HDFC Money Market Fund 5.94 7.02 6.92 HDFC Multi-Asset Fund 42.5 9.6 9.69 HDFC Overnight Fund 2.92 4.68 5.21 HDFC Short Term Debt Fund 10.03 8.58 8.19 HDFC Ultra Short-Term Fund 5.84 - - Krishan Kumar Daga Daga has collectively over 24 years of experience in fund management and research. He is working with HDFC AMC since September 2015. Fund Trailing Returns (per cent) 1-Year 3-Year 5-Year HDFC Arbitrage 3.46 4.86 5.31 HDFC Equity Savings Fund 26.65 6.85 9.85 HDFC Gold ETF -0.53 13.41 8.51 HDFC Gold Fund -5.74 13.39 8.73 HDFC Index Fund-NIFTY 50 Plan 62.03 12.3 13.97 HDFC Index Fund-Sensex 59.06 13.21 14.54 HDFC Multi-Asset Fund 42.5 9.6 9.69 HDFC Nifty 50 ETF 62.67 12.79 14.45 HDFC Sensex ETF 59.57 13.78 15.04 Our take on this Investing in an asset allocator fund helps you to have a tactical asset allocation without the headache of doing it yourself. In fact, here, you have knowledgeable and experienced fund managers to take care of the allocations. However, don’t expect its cost to be low. Being a fund of funds, its expense ratio would be on the higher end unless it purely invests in ETFs. Having said that, the question is that whether it is worth paying a higher expense? In the beginning, over one, one and a half per cent expense ratio seems nothing. It gets noteworthy when the compounding starts playing a role as with your returns, the cost will also get compounded. Furthermore, this seems that it would be investing in its own equity, debt & gold funds. Although, they have mentioned that there's a possibility to invest in funds of other AMCs too. However, the probability of the same is quite less. Therefore, we believe that rather than rushing to buy it in an NFO, investors should wait until its portfolio gets ready. Once we have its portfolio, it would be quite easier to judge the performance of this fund.

  • Should you bet on thematic funds?
    Business
    Dalal Street

    Should you bet on thematic funds?

    Thematic funds are the ones that seek to invest in various themes such as manufacturing, business cycle, MNC, PSU, consumption, energy, ESG, etc. However, do not confuse it with sector funds. Sector funds usually invest in different sectors such as banking & financial services, technology, pharma, and healthcare, etc. The only thing in common between thematic funds and sector funds is that, due to its focussed approach, the portfolio is quite concentrated in nature. However, apart from this, there are no similarities between thematic and sectoral funds. Although, there are chances that you might find the same stock in thematic as well as sectoral funds, with completely different investment objectives. Other thematic funds which include special situation funds, business cycle funds, quant funds, etc. have the highest AUM, contributing 39 per cent of the total thematic funds' AUM. This is followed by the ESG theme and Consumption theme, which contributes 18 per cent each of the total AUM in the thematic category. Dissecting the above graph clearly shows that the return in the last one year is purely due to the momentum in the stock markets, where FIIs were the net buyers who bought heavily into Indian stock markets. However, when we look at the three-year and five-year trailing returns then, it is quite depressing for the risk that it undertakes. Aditya Birla Sun Life MNC Fund is the oldest thematic fund in this category, which was launched on April 22, 1994. Followed by that in the same year, on September 30, SBI Magnum Global Fund was launched. Things to keep in mind before investing If you are planning to invest in a thematic fund, then one thing to keep in mind is that they are quite risky. Secondly, these funds have cycles like sector funds. Each theme may perform differently in different market cycles. Therefore, having complete knowledge of when to buy which theme is quite important. Further, you just cannot buy and hold these funds for ages. You need to be quite active while investing in these funds, though not as active as you might get while investing in the stocks. Hence, having a tactical approach is vital. This can be done by deciding when to enter and when to exit. Here, moving averages might help you decide your entry and exit. For instance, if the 50-day moving average (DMA) is crossing above the 200-DMA, then make an entry. However, if 50-DMA crosses below the 200-DMA, then make an exit. Nevertheless, there is no right formula for entry and exit. Is it a good idea to invest? This depends on various factors. Your risk profile is one of the determinants of whether or not to go with thematic funds. If you are a conservative investor then, refrain from investing in these funds. Moderate investors, on the other end, can have limited exposure to these funds, while allocating not more than 5 to 10 per cent of their entire portfolio to these funds. Having said that, aggressive investors can very well invest in them and also, take this as an opportunity to earn that extra return on their portfolio.