Mahindra Pragati Bluechip Yojana -- Wealth Creating Proposition for Your Portfolio?
Mar 02, 2019

Author: Aditi Murkute

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Mahindra mutual fund has launched Mahindra Pragati Bluechip Yojana (MPBY), an open-ended equity scheme investing predominantly in large-cap stocks.

SEBI has classified large-cap stocks as those that fall in the list of the top 100 stocks in terms of market capitalisation and an equity-oriented mutual fund will be called a large-cap fund if it invests a minimum of 80% in equity & equity related instruments of large-cap stocks.

MPBY will allocate its assets within the prescribed limits and is of the view that in terms of market capitalisation large-cap stocks constitutes approximately 70% of the total Market Cap. Besides a large-cap company has stable businesses, greater market share, quality of management, and the sustainability prospects. These are the companies with strong balance sheets and proven track record. Hence certain large-cap companies are also known as blue-chips and are capable of generating 'alpha'.

Mahindra Pragati Bluechip Yojana will focus on creating an agile portfolio that focuses on bluechip companies, pick stocks that are part of a stable group of top 100 companies, follow emerging trends and as per the economic dynamics.

Hence being an equity scheme, MPBY does carry risk. But it's noteworthy that large-cap funds from the risk-return spectrum are considered to be the safest among equity funds.

If you have the stomach for moderately high risk, you may skew your equity portfolio to large-cap mutual fund schemes.  When the equity markets turn turbulent, a pure large cap fund can arrest the downside risk better compared to their pure mid-cap counterparts and even large & mid-cap peers.

Graph 1: Large-cap funds position on the risk-return spectrum

Note: for illustrative purpose only
(Source: PersonalFN Research)

Table 1: NFO Details

Type An open-ended equity scheme predominantly investing in large-cap stocks Category Large Cap Fund
Investment Objective To provide long term capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities and derivatives predominantly in large-cap companies.
However, there can be no assurance that the investment objective of the Scheme will be achieved.
Min. Investment Rs 1,000 and in multiples of Re 1 thereafter Face Value Rs 10 per unit
Plans  • Direct

• Regular
Options • Growth*

• Dividend (Pay out and Reinvestment#)

*Default option

# Default option for Dividend
Entry Load Nil Exit Load • An Exit Load of 1% is payable if Units are redeemed / switched-out up to 1 year from the date of allotment;

• Nil if Units are redeemed / switched-out after 1 year from the date of allotment
Fund Manager Mr V. Balasubramanian Benchmark Index Nifty 50 Index
Issue Opens February 22, 2019 Issue Closes: March 8, 2019
(Source: Scheme Information Document)

How will the scheme allocate its assets?

Under normal circumstances, the scheme's asset allocation will be as under:

Table 2: Asset Allocation of Mahindra Pragati Bluechip Yojana

Instruments Indicative allocations(% of Total Assets) Risk Profile
Minimum Maximum High/Medium/Low
Equity and Equity related Securities of Large Cap companies^* 80 100 High
Equity and Equity related Securities of other companies^ 0 20 High
Debt and Money Market Securities^ (including CBLO, Reverse Repo) 0 20 Low to Medium
Units issued by REITs & InvITs 0 10 Medium to High
^ including derivative instruments to the extent of 50% of the Net Assets of the Scheme. Investment in derivatives shall be for hedging, portfolio balancing and such other purposes as may be permitted from time to time under the Regulations and subject to guidelines issued by SEBI/RBI from time to time.
*Definition of Large Cap Companies: 1st - 100th company in terms of full Market Capitalization. For the purpose of this definition, the list of stocks prepared by AMFI in this regard will be adopted.
(Source: Scheme Information Document)

What will be the Investment Strategy?

The fund manager will follow an active management style. The Scheme will focus on creating an appropriately diversified portfolio of companies with a long-term perspective. The Scheme will follow a top-down approach for sector allocation and will follow a bottom-up approach for stock selection within the sector. The Scheme will focus on identifying the leaders of every industry and focus on businesses that have economies of scale advantage.

The Scheme by utilizing a holistic risk management strategy will endeavour to manage risks associated with investing in equity markets. The Scheme has identified the following risks and has designed risk management strategies, which are embedded in the investment process to manage these risks:

  1. Quality risk - Risk of investing in unsustainable/weak companies

  2. Price risk - Risk of overpaying for a company

  3. Liquidity risk- High impact cost of entry and exit

  4. Volatility risk -Volatility in price due to company or portfolio specific factors

  5. Event risk - Price risk due to a company/sector specific or market event

Who will manage Mahindra Pragati Bluechip Yojana?

Mr V Balasubramanian will manage the scheme actively. He is a Certified Associate of the Indian Institute of Bankers (CAIIB) and holds an M. Com degree. He has over 38 years of work experience of which around 20 years have been in the Mutual Fund Industry and 8 years in Treasury of a nationalized bank.

Before joining Mahindra Asset Management Company Pvt. Ltd as the Chief Portfolio Strategist of Equity in July 2018, he was a CIO at IDBI Asset Management Company Pvt. Ltd. for 8 years. Prior to it, he worked as a Senior Manager in Indian Bank for 8 years.

Currently, some of the schemes, that he manages at the fund house include Mahindra Mutual Fund Kar Bachat Yojana, Mahindra Unnati Emerging Business Yojana and Mahindra Rural Bharat and Consumption Yojana

The outlook for Mahindra Pragati Bluechip Yojana?

Although the large blue-chip companies with strong balance sheets and proven track records could help ride the wave of volatility to a certain extent. At the same time, funds that are restrictive in their investment approach or those funds that invest only in a concentrated portfolio of large caps can be volatile and may fail to generate adequate returns over the long term.

Mahindra Pragati Bluechip Yojana as mentioned in the presentation will follow high conviction (internal evaluation based on pricing) to create a concentrated portfolio in a staggered fashion with a focus to generate alpha using a blended style of investing in Growth and Value stocks.

It will use a top-down approach to identify sectors with potential across different periods based on emerging macro trends followed by a bottom-up stock selection from the Big 100 that have good governance and strong leadership. It will also take tactical calls for short to medium investment horizons.

As far as investing in MPBY is concerned, the performance solely depends on the construction of the portfolio by the fund manager. As markets are unpredictable, investors need to invest cautiously without compromising on long-term growth. Large-cap funds are suitable for those investors who are looking for stable, market-beating returns over the long term. Picking funds with the capacity to deliver high returns at low risk becomes crucial.

PS: If you are looking to invest in the best equity mutual funds that you could invest in 2019 right away, here is PersonalFN's special premium report: Top 5 Equity Funds to Invest In 2019. A report that tells you about five worthy, high growth potential equity schemes that can be instrumental in building significant wealth over the next 5-7 years.


About the Company including business activity

Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989.

QIS was promoted by Mr Ajit Dayal with an objective of providing value-based information/views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.

'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name for providing information on mutual funds and personal financial planning, financial markets in general, etc. and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services.

Quantum Information Services Private Limited (QIS) is registered as Investment Adviser under SEBI (Investment Adviser) Regulations, 2013 and having Registration No.: INA000000680. In terms of the second proviso to Regulation 3 (1) of SEBI (Research Analysts) Regulations, 2014 the Company is not required to obtain Certificate of registration from SEBI.

Disciplinary history

There are no outstanding litigations against the Company, its subsidiaries and its Directors.

Terms and condition on which its offer research report

For the terms and condition for research report click here.

Details of associates

  1. Money Simplified Services Private Limited;

  2. PersonalFN Insurance Services India Private Limited;

  3. Equitymaster Agora Research Private Limited;

  4. Common Sense Living Private Limited;

  5. Quantum Advisors Private Limited;

  6. Quantum Asset Management Company Private Limited;

  7. India Private Limited;

  8. HelpYourNGO Foundation;

  9. Natural Streets for Performing Arts Foundation;

  10. Primary Real Estate Advisors Private Limited;

  11. HYNGO India Private Limited;

  12. Rahul Goel;

  13. I V Subramaniam.

Disclosure with regard to ownership and material conflicts of interest
  1. ‘subject company’ is a company on which a buy/sell/hold view or target price is given/changed in this Research Report;

  2. Neither QIS, it's Associates, Research Analyst or his/her relative have any financial interest in the subject Company;

  3. Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report;

  4. Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However, any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront / annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices.

Disclosure with regard to receipt of Compensation
  1. Neither QIS nor it's Associates have received any compensation from the subject Company in the past twelve months;

  2. Neither QIS nor it's Associates have managed or co-managed public offering of securities for the subject Company;

  3. Neither QIS nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject Company;

  4. Neither QIS nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.

  5. Neither QIS nor it's Associates have received any compensation or other benefits from the subject Company or third party in connection with the research report

General disclosure
  1. The Research Analyst has not served as an officer, director or employee of the subject Company.

  2. QIS or the Research Analyst has not been engaged in market making activity for the subject Company.

Definitions of Terms Used
  1. Buy recommendation:This means that the subscriber could consider buying the concerned fund keeping in mind the tenure and objective of the recommendation service.

  2. Hold recommendation:This means that the subscriber could consider holding on to the fund until further update. However, additional purchase via ongoing SIP can be considered.

  3. Sell recommendation: This means that the subscriber could consider selling the fund keeping in mind the objective of the recommendation service.

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Quantum Information Services Private Limited CIN: U65990MH1989PTC054667 Regd. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021 Corp. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021. Email: Website: Tel.: 022 61361200 Fax.: 022 61361222

SEBI-registered Investment Adviser. Registration No. INA000000680, SEBI (Investment Advisers) Regulation, 2013

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