A closed ended fund that seeks to generate capital appreciation by investing across market capitalisations.

Summary

Type	Closed-ended Equity- Diversified	Benchmark Index	S&P BSE 500
Min. Investment: Additional Investment: SIP:	Rs 5, 000 In the multiples of Rs 10 Not Available	Exit Load: Expense ratio:	0.25% for exit within 1 month from the date of allotment 2.70% (estimated)
Entry Load	Nil	Face Value	Rs. 10
Issue Opens	April 09, 2013	Issue Closes:	April 10, 2013

 

Investment Objective*

The primary investment objective of the scheme is to “seek to provide long-term capital appreciation from a portfolio that is invested in equity and equity-related securities. The fund will invest in either growth stocks or value stocks or both without any capitalization bias. As and when the fund manager is of the view that the investment has met its desired objective, the same shall be liquidated and distributed by way of dividend. However, there can be no assurance that the investment objective of the scheme will be realized”.

(Source: Scheme Information Document)

 

Is this fund for you?

The fund is being launched at the time when midcap and smallcap indices have started cracking after a brisk rally witnessed in last few months of 2012. Although handful of largecaps which have a substantial weightage in broader market indices, are holding markets tightly; market look weak. The fund has been launched on the premise that economic slump may have reached its bottom and real economy may enter a phase of growth sooner or later. IEOF intends to identify and invest in those companies which would benefit from India growth story.

Portfolio Strategy

Following the blend of top down and bottom up approach, IEOF endeavours to invest in 60-80 stocks without being biased to any particular market capitalisation. While selecting stocks it would assess companies based on parameters such as quality of management, history of promoter, financial strength of the company and market valuations. The fund aims to take long term calls on stocks and thus would invest in companies which are, at present, available at discount to their potential. The fund has retained flexibility to invest either in growth stocks, value stocks or in both, remaining consistent with the investment objective.

 

Asset Class	Allocation Range	Risk Profile (High / Medium / Low)
Equity and equity related instruments	65%-100%	High
Debt and money market Instruments	0%-20%	Low-Medium

(Source: Scheme Information Document)  

Under normal circumstances, the equity component of the fund would carry a weightage in the range of 65% to 100% of its portfolio. Within equity, the fund may invest upto 50% of its assets in ADRs and GDRs. For the purpose of hedging, IEOF may also enter derivative contracts which may assume upto 50% weight in the portfolio. The fund is benchmarked against CNX 500 Index.

 

Fund Manager Profile

Mr Kenneth Andrade – Head Investments at IDFC Asset Management Pvt. Ltd. has been given the responsibility to manage IEOF. He is a Commerce graduate from University of Mumbai and has around 17 years of experience in Equity Research & fund management. Prior to joining IDFC Mutual Fund (erstwhile Standard Chartered Mutual Fund) in October 2005, he worked as Fund Manager (Equity) with Kotak Mahindra AMC (July 2002- Sept.2005), prior to which he has been associated with companies like SSKI Investor Services, Nimbus Communications, LKP Shares & Stock Brokers Pvt. Ltd. and Meghraj Financial Services.

Mr Andrade also manages, IDFC Premier Equity Fund, IDFC Equity Fund, IDFC Imperial Equity Fund, IDFC Infrastructure Fund, IDFC Sterling Equity Fund and IDFC Strategic Sector (50:50) Equity Fund.

The performance of funds under his management has been mixed so far. Mid and small cap oriented funds have done exceedingly well under his management and have outperformed their respective indices but others have failed to do so.

 

Fund Outlook

IDFC Equity Opportunities Fund is the close ended equity diversified fund. It is a no market cap biased fund and has flexibility to follow any investment style that is consistent with long term investment objective of the fund and permitted by the regulator. This makes the fund well equipped to deal with stock market volatility. However, this advantage is partially erased with its biased to a specific theme. Given its focus on sectors and companies which are expected to benefit from growth of Indian economy; portfolio of the fund may be concentrated in few sectors. Although the fund may, in principle, may not be biased towards any specific market capitalisation segment; however, given the track record of the fund manager, the possibility of it being biased towards mid and smallcaps can’t be ruled out. Closed ended nature would ensure that fund doesn’t have redemption pressure which may allow the fund manager to take long term calls on smaller companies and try to generate above average returns. However, as a result, the fund may closely track movement of mid and small cap segment as a whole.

 

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