An open-ended equity oriented fund with an objective to provide medium to long term capital appreciation through appropriate diversification and taking low risk on business quality.

Summary

Type	An Open ended equity Scheme	Benchmark Index	Nifty 200 Index
Min. investment:	-Lump sum- Rs 1,000 and multiples of Rs 1 thereafter - Additional purchase - Rs 1,000 and multiples of Rs 1 thereafter & -Systematic Investment Plan - Rs 500 and in multiples of Rs 1 thereafter	Plans: Options:	Regular Direct   Growth* Dividend Dividend Reinvestment Dividend Payout *default option
Face Value	Rs 10 per unit	Expense Ratio:	Upto 2.50%
Entry Load	NA	Exit Load:	1% is payable if Units are redeemed / switched-out upto 1 year from the date of allotment Nil if units are redeemed / switched-out after 1 year from the date of allotment
Issue Opens	April 20, 2017	Issue Closes	May 04, 2017

Investment Objective*

The investment objective of the scheme is to provide medium to long term capital appreciation through appropriate diversification and taking low risk on business quality. The diversified portfolio would predominantly consist of equity and equity related securities including derivatives.

However, there can be no assurance that the investment objective of the scheme will be achieved.

*Source: Scheme Information Document

Is this fund for you?

Mahindra Mutual Fund Badhat Yojana (MMFBY) is an open-ended equity fund with an aim to provide medium to long term capital appreciation.

Being an equity oriented MMFBY is mandated to invest around 75% - 100% of its net assets into equity & equity related instruments including derivative instruments. With its aim to provide capital appreciation over the long-term the fund is suitable for investor with long-term investment horizon and high risk appetite. Further the fund might also invest into derivative instruments for hedging, portfolio balancing and such other purposes. It is also mandated to invest upto 25% of its net assets into debt securities.

Hence, MMFBY is suitable for investors only with a high-risk appetite, who have a long-term investment horizon of at least 5 years with a view to build your wealth.

Being a new entrant in the Indian mutual fund industry Mahindra Mutual Fund is a Marching On A Road Less Travelled. The fund house is sponsored by Mahindra & Mahindra Financial Services Limited, while Mahindra Trustee Company Private Ltd. being the trustee. Mahindra Asset Management Company Private Ltd. is the investment manager of the schemes of the fund house.

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
Equity and equity related instruments^	75	100	High
Debt and Money market instruments (including CBLO, Reverse Repo and units of liquid mutual fund schemes)	0%	25	Low to Medium

^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 maybe permitted from time to time under the Regulations and subject to guidelines issued by SEBI/RBI from time to time.
 

Further it is stated in the offer document that:

- The Scheme may also engage in Securities Lending and Borrowing Obligations subject to following limits:

1. Not exceeding 20% of the net assets of the Scheme;
2. And not more than 5% of the net assets of the Scheme can generally be deployed in securities lending to any single counter party.
    

- The Scheme does not propose to invest in foreign securities

- The Scheme shall not invest in securitised debt, credit default swaps and repos in corporate bonds

(*Source: Scheme Information Document)

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What investment strategies will the fund follow?

In the endeavour to achieve the investment objective set out, MMFBY will follow the below mentioned investment strategy…

For Equity Investments:

The fund manager will follow an active management style. The scheme will focus on creating an appropriate diversified portfolio of companies with a long-term perspective. It will follow a top-down approach to select sectors and follow a bottom-up approach to pick stocks across the sectors based on the quality of business model and quality of management. Quality of business model and quality of management will be assessed by: a) profitable & profitable growth in good or bad cycles; b) Optimum utilization of capital; c) leadership shown in the industry in which they operate; and d) track record of consistent & long term execution potential.

Further, MMFBY will follow a holistic risk management strategy in order to manage risks associated with investing in equity markets. The Scheme has identified the following risks and designed risk management strategies, which are designed 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
    

For Derivatives:

As mentioned before, derivatives will be used for the purpose of hedging, and portfolio balancing or such other purpose as may be permitted under the regulations and Guidelines from time to time. Such investments shall be subject to the investment objective and strategy of the Scheme and the internal limits if any, as laid down from time to time. These include but are not limited to futures (both stock and index) and options (stock and index).

For Debt Investments:

The fund is mandated to invest upto 25% of its net assets into debt and money market securities. This includes CBLO, Reverse Repo and units of liquid mutual fund schemes.

The Scheme may also use debt derivative instruments like interest rate swaps like Overnight Indexed Swaps (“OIS”), forward rate agreements, interest rate futures (as and when permitted) or such other derivative instruments as may be permitted under the applicable regulations.

He will further check list interest rate outlook, risk management guidelines, yield to maturity of the instrument, yield curve analysis, liquidity of the instrument, credit rating, credit spreads and compliance with SEBI guidelines.

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Fund Manager Profile

MMFBY will be managed by: Mr Ratish Varier

Mr Ratish Varier is the Fund Manager – Equity at Mahindra Asset Management Co. Pvt. Ltd. Mr Varier has to his credit an MBA degree in Finance and a CPM certification. He has around 10 years of experience in the finance industry. Prior to joining Mahindra Asset Management Co. Pvt. Ltd. in September 2013, he was associated with Reliance Life Insurance Company as Manager – Equities, and ICAP Pvt Ltd. as Dealer – Corporate Bonds.

Currently he manages other funds such as Mahindra Mutual Fund Kar Bachat Yojana and Mahindra Mutual Fund Dhan Sanchay Yojana.

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Fund Outlook

On evaluating the investment objective and strategy, it is evident that the MMFBY is suitable for aggressive investors with a long term horizon, a minimum of 5 years or more and who wish to build their wealth by investing into equity fund.

The Sensex has gained nearly 12.0% so far, this year, logging the highest gain among Asian equity indices. Among the BRIC nations too, India is a top gainer. But this record rally has pushed valuations – across market capitalisations – in the overpriced zone. So, the margin of safety has considerably narrowed.

Also, from a valuation standpoint as well, the Indian equity market has become clearly overpriced. The trail P/E of the small-cap and mid-cap index is sailing at 72x and 33x respectively, overtly placed in the overpriced territory. Even the large caps and the benchmark S&P trail P/E, is also hovering around 25x and 23x respectively, displaying a low safety margin. Hence, amid times when valuations have scaled up, when the downside risk is high; portfolio construction could be a challenging task.

But fortunately, India’s economy has grown at a strong pace in recent years owing to the implementation of critical structural reforms, favourable terms of trade, and lower external vulnerabilities.

Now the fortune of MMFBY is closely linked with how astutely the fund manager constructs a portfolio in the current overpriced market scenario. Hence, it is very important the way the fund manager builds his portfolio. So, before you make your mind to invest, ensure that you have a high risk appetite and long-term investment horizon.
 

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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. Natural Streets for Performing Arts Foundation;
10. Primary Real Estate Advisors Private Limited;
11. Rahul Goel;
12. 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, except that QIS had receive fees for services under sponsorship agreement from Franklin Templeton Asset Management India Pvt. Ltd.
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. 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021. Tel: +91 22 6136 1200
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Quantum Information Services Pvt. Ltd. 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: info@personalfn.com CIN: U65990MH1989PTC054667

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