An open-ended balanced scheme with primary objective of long term capital appreciation along with income by investing in diversified basket of equity & equity related instruments, debt and money market instruments.

Summary

Type	An Open Ended Balanced Scheme	Benchmark Index	50% S&P BSE 500 Index + 50% CRISIL Composite Bond Fund Index
Min. investment:	-Lump sum Rs 5,000/- and multiples of Rs 1 thereafter - Systematic Investment Plan - Rs 1,000 and in multiples of Rs 1 thereafter	Plans: Options:	Regular Direct Growth* Dividend Dividend Reinvestment Dividend Payout Dividend Sweep *default option
Face Value	Rs 10 per unit	Expense Ratio:	Upto 2.50%
Entry Load	Nil	Exit Load:	1% for exit (repurchase/switch-out/SWP within 12 months from the date of allotment for subscription received during the NFO period. No load on exit after the afore mentioned period)
Issue Opens	October 03, 2016	Issue Closes:	October 17, 2016

 

Investment Objective*

The schemes' investment objective is to generate opportunities for capital appreciation along with income by investing in a diversified equity and equity related instruments, debt and money market instruments.

However, there can be no assurance that the investment objective of the scheme would be realised.

 

*Source: Scheme Information Document

 

Is this fund for you?

IDBI Prudence Fund (IPF) is an open-ended balanced fund which seeks to invest in equity and equity related instruments as well as credit instruments, Government securities, and money market instruments. It aims to invest minimum 35% of its assets in equity and equity related instrument, and equity investments will be limited to companies that are constituents of S&P BSE 500 Index and are having a total market capitalisation of at least Rs 2,500 crore at the time of investment.

Besides, IPF also has a mandate to invest (upto 10% of its assets) in profitable arbitrage opportunities available in market at a given point of time to take advantage of spreads between cash and derivatives market. In the absence of arbitrage opportunity in the market the scheme may invest that allocation in debt and money market instruments.

In debt instruments, IPF has a mandate to invest upto 60% of its assets including fixed/floating rate debt instruments and securitized debt and money market instruments, and the debt instruments will be limited to those with A1+/ AA+ rating and above.

Based on the above, IPF is suitable for investors with a high risk appetite, who have a long-term investment horizon of at least 5 years in their pursuit of wealth creation. A noteworthy point is, balanced funds change their asset allocation across the asset classes as per the prevailing market condition and investment opportunities based on what the fund management perceives. It also depends on changing economic and political factors and applicable regulations at all times. Thus the fund is best suited for aggressive investors who are willing to assume risk and looking for diversification in their portfolio. Since the fund will never hold 60% holding in equity, it will enjoy favourable tax treatment like other pure equity funds.
 

How will the fund allocate its assets?

Under normal circumstances, the asset allocation pattern followed by the fund will be as under:

 

Instruments	Indicative allocations (% of total assets)		Risk Profile High/Medium/Low
	Minimum	Maximum
Equities and equity related instruments	35	60	High
Equity Arbitrage Exposure	5	10	Low to Medium
Debt (including fixed/floating rate debt instruments and securitized debt) & Money Market Instruments	30	60	Low to Medium

*Source: Scheme Information Document  

Further it is stated in the offer document that:

• If the suitable equity arbitrage opportunities are not available in the opinion of the fund manager, the scheme may invest arbitrage allocation (5-10%) in debt and money market instruments.


• Equity investments will be limited to companies that will be constituents of the S&P BSE 500 Index universe and with total market capitalization of at least Rs 2,500 crores.


• The scheme shall not deploy more than 20% of its net assets in securities lending and also not more than 5% in securities lending to any single counterparty.


• The Scheme does not propose to invest in ADRs/GDRs and foreign securities.


• Investment in Securitized Debt not to exceed 10% of the net assets of the Scheme.


• Scheme may enter into repos/reverse repos, including repo in corporate debt securities, as may be permitted by RBI.


• The scheme will not write options or purchase instruments with embedded written options. The total exposure related to option premium paid will not exceed 20% of the net assets of the scheme.


• The funds may be parked in short term deposits of the Scheduled Commercial Banks, subject to guidelines and limits specified by SEBI from time to time.

Also, it may be noted that the asset allocation percentages stated above are only indicative and not definitive.

 

What investment strategies will the fund follow?

In the endeavour to achieve the investment objective set out, IPF will actively manage both equity and debt components. The fund will follow the below mentioned investment strategy...

For Equity Investments:
IPF under normal conditions would invest 35-60% of its assets in equity and equity related instruments without any sector/style bias. It will give due consideration to maintain liquidity. Equity investments will be limited to companies that are constituents of S&P BSE 500 Index with total market capitalisation of atleast Rs 2,500 crore. The scheme may retain securities in the portfolio even if they are excluded from S&P BSE 500 index subsequently, if the fundamental outlook of the company merits continuation of the security in the scheme. However, not additional purchases will be permitted.

The companies will be shortlisted on the basis of their superior growth potential and likelihood to be long-term wealth creators. The scheme will adopt bottom up approach to identify fundamentally sound companies that have long-term growth potential at reasonable prices while also exploiting short-term trading opportunities that may arise from time to time. The selection of companies will depend on various drivers including earnings growth and quality, competitive advantage, pricing power, robust business model, liquidity, established or emergent leadership position, management quality current valuation and long term growth potential. This will help to identify fundamentally sound companies that have long-term growth potential at reasonable prices while also exploiting short-term trading opportunities that may arise from time to time.

Equity related instruments include stocks and shares of companies, foreign currency convertible bonds(FCCB), derivative instruments like stock future/options and index futures and options, warrants and convertible preference shares.

 

For Arbitrage and Derivatives Strategies:
The scheme may invest in arbitrage opportunities between spot and futures prices of exchange traded equities. The Scheme may build similar hedge positions that offer an arbitrage potential for example buying the basket of index constituents in the cash or futures segment and selling the index futures, and selling the corresponding stock future, etc. The Scheme will also invest in low risk derivatives strategies. These strategies will involve any combination of cash, futures and options.

 

For Debt Investments:
Debt exposure would be actively managed from both credit and interest rate risk perspectives with focus on accruals and liquidity of investments. Investment in debt and money market instruments shall be limited to instruments with rating of A1+/AA+ and above while investing. The Scheme shall invest in various types of permitted Debt Instruments including Collateralized Borrowing and Lending Obligations (CBLO), Reverse Repo, Non-convertible debentures and bonds, Floating rate debt instruments Certificate of Deposit (CD) of scheduled commercial banks and development financial Institutions, Commercial Paper (CP),Government Securities, Corporate Debt, Other debt instruments and Money Market Instruments of various maturities and ratings with the objective of providing liquidity and achieving optimal returns.

The scheme's portfolio will be monitored on an ongoing basis and returns would be commensurate with the levels of risk taken in the portfolio and the portfolio would be structured to incorporate reasonable liquidity by the use of cash and cash equivalents.

 

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Fund Manager Profile

 

Mr V. Balasubramanian (For Equity Component): He has over 35 years of experience of which 17 years have been in Mutual Fund Industry and 8 years in Treasury of a nationalised bank. He has to his credit a Master's degree in Commerce (M.Com.) and CAIIB.

Mr Gautum Kaul (For Debt Component): He has over 14 years of experience in debt markets of which he has 10 years of experience in the mutual fund industry. He holds a Bachelors' degree in Commerce (B. Com) and a MBA.

 

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Fund Outlook

 

After evaluating the fund's objective, investment and portfolio strategy; it is clear that IPF will largely invest across the asset classes, but maintaining at all times at least 60% of its assets in equity and equity related instruments. It is not biased towards any particular sector or theme; the fund's portfolio risk will be diversified. And being a balanced fund, it possesses the flexibility of investing between asset classes to take advantage of price movements in each asset class. The fortune of IPF is closely linked to how the fund manager takes charge of rebalancing of the portfolio as per the market conditions on a regular basis.

The outlook for portfolio construction has turned conducive. A normal southwest monsoon this year, has significantly boosted agricultural activity and would augur well for the Indian economy as whole. The core sector growth (comprising of 8 industries: coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity) has increased to 3.2% in August (from +1.4% in the month before) due to sharp upswing in steel and cement which rose 17% and 3.1% respectively. This possibly suggests infrastructure activity is gaining pace. India's consumption story is on a verge of a breakout supported by salary hikes, bonus pay-outs, awards of the 7th Pay Commission, availability of credit/loans, rising aspirations, amongst a host of other factors. With this consumption story, industries are likely to expand capacity and make hay when the sun shines. In such times, automobile companies, consumer durables, realty, FMCG companies, and banking & financial services are likely to largest beneficiaries. RBI in the industrial outlook survey has made an observation that while private investment activity remains sluggish, corporate business expectations remains upbeat on improving prospects for production, capacity, utilisation, employment and the availability of finance. Further, over the medium-term, the implementation of GST would also boost business confidence and investment, brightening the environment for growth.

The unexpected rate cut by RBI in the fourth bi-monthly monetary policy statement for 2016-17 on the back of falling inflation, would come be an added fuel.

Given the fact that India is the fastest growing Asian economy at present, amid a time when global growth forecast appear dim and industrial activity in advanced economies has substantially weakened (giving rise to protectionism in some developed world economies); foreign investment would continue to flow in.

Nevertheless, market would not be distant to the newsflashes of the global economy.

Hence long-term capital appreciation and income distribution would be hinged on how well the fund manager plays the opportunities and challenges – both in the equity and debt market segment. The fortune of the fund depends on fund manager's ability to be on toes and grab opportunities in such dynamic market conditions and still generate returns.

 

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DISCLOSURE AS PER SECURITIES AND EXCHANGE BOARD OF INDIA (RESEARCH ANALYSTS) REGULATIONS, 2014  

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 www.personalfn.com 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.

Disciplinary history

There are no outstanding litigations against the Company, it 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 Limited;
2. PersonalFN Insurance Services India 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. HelpYourNGO Private Limited;
8. HelpYourNGO Foundation;
9. QIEF Management LLC, Mauritius
10. Natural Streets for Performing Arts Foundation;
11. Primary Real Estate Advisors Private Limited;
12. Rahul Goel;
13. I V Subramaniam.

Disclosure with regard to ownership and material conflicts of interest
 

1. Neither QIS, it's Associates, Research Analyst or his/her relative have any financial interest in the subject Company, except QIS receives fees for providing research to Quantum Equity Fund of Fund (QEFoF) which is Fund of Fund scheme managed by QMF and our associates has financial interest in the subject company.
2. 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.
3. 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 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 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 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 in the past twelve months.
3. Neither QIS nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject Company in the past twelve months.
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.
    

Subject Company means Mutual Fund Schemes

Quantum Information Services Pvt. Ltd. 101, Raheja Chambers, 213, Nariman Point, Mumbai - 400021. Tel: +91 22 6136 1200
Website : www.personalfn.com CIN: U65990MH1989PTC054667

 

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Quantum Information Services Pvt. Ltd. 101, Raheja Chambers, 213, Nariman Point, Mumbai - 400021. Tel: +91 22 6136 1200
Website : www.personalfn.com CIN: U65990MH1989PTC054667

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