An open-ended balanced fund which seeks to generate long term capital appreciation along with current income by investing in a mix of equity & equity related instruments, debt and money market instruments.

Summary

Type	An Open Ended Balanced Scheme	Benchmark Index	CRISIL Balanced Fund Index
Min. investment:	-Lump sum Rs 5,000/- and any amount 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:	In respect of each purchase of Units: - For 10% of investment: Nil - For remaining investment: 1% if redeemed/switched out within 12 months from the date of allotment
Issue Opens	December 12, 2016	Issue Closes:	December 26, 2016

Investment Objective*

The fund's investment objective is to generate long term capital appreciation along with current income by investing in a mix of equity and equity related securities, debt securities 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?

Under normal circumstances the fund aims to invest upto 60% of its assets in equity & equity related instruments. The equity investment will be spread across the market capitalisations and sectors. Further, the equity exposure would be hedged with corresponding equity derivative in the range of 5%-15%. But the idea will not be to increase equity exposure using derivatives.

Besides, IBF will invest in debt and money market instruments in the range of 35%-60%.

Whenever the fund manager finds arbitrage opportunities to be inadequate, defensive investment strategies will be followed, where Equity & Equity related instruments would be held in the range of 40%-60% of its assets, and so will debt and money market instruments in a similar range.

The fund may change its asset allocation from time to time keeping in view market and economic conditions and various opportunities available at a given point of time. When the Fund manager believes market conditions are unfavourable for investors, he may deploy 100% of its assets in a temporary defensive manner by holding all or substantial portion of its assets in cash, cash equivalents or high quality short-term investments.

Based on the above, IBF is suitable for investors with a moderate-to-high risk appetite, having an investment horizon of at least 5 years in their pursuit of wealth creation. The performance of IBF would be vulnerable to the price movement of the securities it is invested in. Further, to an extent there will be a risk of investing in derivatives and arbitrage risk. But being a balanced fund, it can change its 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.
 

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	Medium to High
Net Equity Arbitrage Exposure*	5	15	Medium to High15
Debt Securities & Money Market Instruments	35	60	Low to Medium

*Source: Scheme Information Document

* Equity exposure would be hedged with corresponding equity derivatives of 5% - 15%. Arbitrage will have fully set-off position with Zero Net Market Exposure. To the extent of arbitrage allocations, the Scheme would hold spot market positions only for the purpose of arbitrage opportunities and not to benefit from any upside potential that stocks may provide in the present or in future.

Under Defensive circumstances (i.e., when the arbitrage opportunities in the market are inadequate, in view of the fund manager) the fund's asset allocation would be as follows:

Instruments	Indicative allocations (% of total assets)		Risk Profile High/Medium/Low
	Minimum	Maximum
Equities and equity related instruments	40	60	Medium to High
Debt Securities & Money Market Instruments	40	60	Low to Medium

*Source: Scheme Information Document

Further it is stated in the offer document that:

• The cumulative gross exposure through repo transactions in corporate debt securities along with equity, debt and derivatives shall not exceed 100% net assets of the scheme
   
• Whenever the equity and equity derivative investment strategy (arbitrage strategy) is not likely to give return comparable with the fixed income securities portfolio, the fund manager will invest in fixed income securities. This is subject to the 30 days' rebalancing period provision.
   
• The scheme may invest in units of debt and liquid mutual fund schemes and Equity ETFs within the above limits.
   
• The scheme shall deploy upto 15% of its net assets in securitised debt, upto 50% in foreign securities and upto 20% in securities lending
   
• The scheme further will invest upto 50% of its net assets in Derivatives
   
• The scheme may also indulge in short selling of securities in accordance with the applicable guidelines

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What investment strategies will the fund follow?

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

For equity allocation:
The fund is mandated to build a diversified equity portfolio of companies across market cap and sectors with a large cap bias.

For debt allocation:
The scheme shall invest in various types of permitted debt and money market securities (including G-Sec) across maturities. Debt instruments include: non-convertible bonds issued by corporates, banks, other financial institutions and central or state government. It may also invest in Certificate of Deposits (CDs), Commercial Paper (CPs), CBLO, Repos in corporate debt and other money market instruments. The allocation would be based on prevailing economic environment (including interest rates and inflation), the performance of corporate sector, liquidity conditions and other considerations in the economy and market.

For derivatives:
The scheme will vary its investment in equity and equity related instruments and move towards exposure to equity derivatives when it needs to bring down the effective equity exposure, depending on the prevailing market conditions. Given that the fund is a balanced fund, allocation between equity and debt instruments will be dynamically managed with the derivative allocation providing opportunities to hedge equity exposure so as to provide a lower risk alternative to equity allocation. The scheme may use derivatives instruments like Stock/ Index Futures, Interest Rate Swaps, Forward Contracts or any such derivative instruments.
 

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Fund Manager Profile

Mr Anoop Bhaskar (Head- Equity): He has overall experience of around 26 years in the mutual fund industry. He has been associated with IDFC AMC since February 2016. He holds a Bachelors degree in Commerce with Honours [B. Com (Hons)] and has to his credits a degree in MBA(Finance).

Mr Suyash Choudary (Head- Fixed Income): His experience spans over 15 years in Fixed Income Investments. He has Bachelors degree in Economics with Honours [BA (Hons)] from Delhi University & a PGDM from IIM Calcutta.

Mr. Anurag Mittal (Senior Director-Fund Management): He has an overall experience of 9 years in the industry. He hold a Bachelors degree in Commerce with Honours B.Com (Hons), has a Masters degree in Science with specialisation in Finance, [M.Sc.(Accounting & Finance) from London School of Economics & Political Science, plus a degree in Chartered Accountancy (CA). He will be responsible for investments and fund management.

Mr. Viraj Kulkarni (Dedicated fund manager for foreign securities): He will be a dedicated fund manager for foreign securities. He has around 4 years of experience, and is a Chartered Financial Analyst (CFA), plus holds a PGDM in Finance and a Bachelor's degree in Technology with specialisation in Electronics [B.Tech (Electronics).]

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Fund Outlook

After evaluating the fund's objective, investment and portfolio strategy; it is clear that IBF will largely invest across the asset classes. It will invest at least 30% of its assets in equity and equity related instruments without bias towards any particular sector or theme. And being a balanced fund, it possesses the flexibility of investing between asset classes to take advantage of price movements in each asset class. Thus, in a sense, the fund will hold a diversified equity portfolio.

The fortune of IBF is closely linked to how the fund manager build the portfolio and rebalances it as per the market conditions on a regular basis.

Currently the market conditions are highly volatile and uncertainty is at its peak. As the impact of demonetisation will be realised in the next six months, its impact on the GDP is a concern. Valuations dropped significantly – thanks to the fall in prices and marginally improved earnings. The mid and small cap space, although has corrected, the margin of safety is not conducive. If Indian equities tumble due to any global and/or domestic factors, the mid and small cap space will tend to plunge more than large caps. Earnings are failing to justify valuations; it may not only weigh on the market, but also on corporate tax collections and investment cycle (due to a lag effect). The impact of corporate earnings on your mutual fund portfolio would be hinged on the portfolio characteristics of the mutual fund schemes you hold in your portfolio.

With global uncertainty that's haunting the world, more so from the U.S. with Mr Donald Trump at the helm of affairs in the world's largest economy many analyst and economist are in the consensus that Federal Reserve has hiked interest rates by 25 bps in its Fed meeting held on December 14, 2016. This is only the second increase in the last 10 years. A rate hike in the US usually leads to some reaction in emerging market equities as investors pull out money from emerging markets and invest in the US with higher yield expectations.

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.

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 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, 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. Regd. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021 Corp. Office: 101 Raheja Chambers, 213, Free Press Journal Marg, Nariman Point, Mumbai 400021. Email: info@personalfn.com CIN: U65990MH1989PTC054667

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

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