An open-ended balanced scheme which seeks to generate long term capital appreciation through investments in equity and equity related instruments and income from investing in debt and money market instrument.

Summary

Type	An Open ended balanced scheme	Benchmark Index	50% CNX Nifty + 50% CRISIL Composite Bond Fund 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 (i) Compulsory Lock-in*; and (ii) No Lock-in# (default sub-plan) Direct (i) Compulsory Lock-in*; and (ii) No Lock-in# (default sub-plan)   Growth (default option) Dividend Dividend payout Dividend Reinvestment
Face Value	Rs 10 per unit	Expense Ratio:	Upto 2.50%
Entry Load	NA	Exit Load:	Under Compulsory Lock-in: Nil post lock-in period Under No Lock-in: -an exit Load of 3% is payable if units are redeemed / switched-out upto 1 year from the date of allotment; - an exit Load of 2% is payable if units are redeemed / switched-out after 1 year and upto 2 years from the date of allotment; - an exit Load of 1% is payable if units are redeemed / switched-out after 2 years and upto 3 years from the date of allotment; - Nil if units are redeemed / switched-out after 3 years from the date of allotment.
Issue Opens	April 20, 2017	Issue Closes	May 04, 2017

$ The Dividend Reinvestment facility will not be available under the Compulsory Lock-in sub-plan

* Compulsory Lock-in: Investment will be locked-in till the unitholder (being the Beneficiary Child) is 18 years of age. Investment may be redeemed after the unitholder is 18 years of age or 3 years from the date of allotment, whichever is later.

# No Lock-in Investment will not be locked-in & can be redeemed at any point of time at NAV based prices subject to exit load.
 

Investment Objective*

The investment objective of the scheme is to generate long term capital appreciation through investments in equity and equity related instruments and also income from investing in debt and money market instrument.

However, there can be no assurance that the investment objective of the Scheme will be achieved. The Scheme does not assure or guarantee any returns.

*Source: Scheme Information Document

Is this fund for you?

Mahindra Mutual Fund Bal Vikas Yojana (MMFBVY) is an open-ended balanced fund with a lock-in feature. The fund is being launched with salient features like investments can be made only in the name of your minor child (below 18 years of age). The investments can be done by any family member and/or guardian. Further there is an option to lock-in investment till your child attains majority i.e. above 18 years of age. And in case if you don’t wish to lock-in money for the long-term; you have that option too (which is the default sub-plan). However, as the name suggests, the fund is being launched with a long-term view to help you create your child’s future.

Overall, MMFBVY is a balanced fund which under normal circumstances is mandated to invest upto 60% of its net assets in equity & equity related assets. And to hedge its equity positions, would invest in derivatives such as index futures, stock futures, index options, stock options etc. by allocating upto 15% of its assets to such instruments. Further, in the endeavour to generate long-term income with accrual and capital appreciation, MMFBVY will invest upto 55% of its net assets in debt and money market instruments.

Hence, MMFBVY is suitable for investors only with a high-risk appetite, who have a long-term investment horizon of at least 5 years and intend to plan for their child’s future.

Mahindra Asset Management is the new entrant in the Indian mutual fund industry. 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.
 

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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 Securities^	40	60	High
Equities, equity related instruments and derivatives including index futures, stock futures, index options, & stock options, etc. as part of hedged / arbitrage exposure$ ^	5	15	Medium to High
Debt* and Money market instruments^ and units of mutual fund schemes	25	55	Low to Medium

When adequate arbitrage opportunities are not available and accessible in the cash and derivative market segment, the asset allocation of the Scheme will be as under:
 

Instruments	Indicative allocations (% of total assets)		Risk Profile High/Medium/Low
	Minimum	Maximum
Equity and Equity related Securities^	40	60	High
Debt*, Money Market Instruments^ and units of mutual fund schemes	40	60	Low to Medium

*Includes securitized debt (excluding foreign securitized debt) up to 30% of the net assets of the Scheme. The Scheme shall not invest in foreign securitized debt

$Equity allocation is measured as the Gross exposure to equities, equity related instruments and derivatives. The scheme will enter into derivatives transactions for hedging. The derivative positions will be hedged against corresponding positions in either equity or derivative markets depending on the strategies involved and execution costs. On the total portfolio level the scheme does not intend to take a net short exposure to equity markets. Unhedged positions in the portfolio (investments in equity shares without corresponding exposure to equity derivative) shall not exceed 60% of the net assets

^ 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
 

(*Source: Scheme Information Document)

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 and repos in corporate bonds

- The Scheme shall not engage in short selling
 

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What investment strategies will the fund follow....

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

For Equity allocation:

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 appropriate business environment, business model and execution capability. Further the focus will be on extensive macro and micro research to identify appropriate economic environment and reasonable price entry and exit points.

Further, MMFBVY 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 allocation:

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).

Derivatives are financial contracts of pre-determined fixed duration, whose values are derived from the value of an underlying primary financial instrument such as interest rates, exchange rates, commodities and equities.

For Debt allocation:

With an objective of long term income with accrual and capital appreciation the fund manager will seek to generate returns by balancing the maturity and credit profile. The fund manager will change the underling debt portfolio depending upon the changing interest rates. He will further invest in debt instruments after doing a thorough research on historical yield spread among various debt instruments. In other words, various instruments will be compared on the basis of its credit quality and maturity profile. The fund manager further will seek to generate alpha by investing in instruments generating superior returns after in depth analysis of various micro and macro-economic factors.

Further, the investment team at Mahindra Mutual Fund will carry out rigorous credit evaluation of the issuer company proposed to be invested. The instrument will be analysed on the basis of the operating environment of the issuer, the sector analysis, business model, management, governance practices, quality of the financials, the past track record as well as the future prospects of the issuer and the financial health of the issuer.

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Fund Manager Profile

MMFBVY will be managed by the duo: Mr Ratish Varier and Mr Rahul Pal

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.

Mr Rahul Pal is Head of Fixed Income at Mahindra Asset Management Co. He is a Chartered Accountant with Bachelors degree in Commerce (B. Com). Prior to joining Mahindra Asset Management Company, he was associated with Taurus Asset Management Company Limited as ‘Head – Fixed Income’, and earlier with Sundaram Asset Management Company Limited as a ‘Fund Manager – Fixed Income’. In these roles, he holds experience spreading over a decade.
 

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Fund Outlook

After evaluating the investment objective and strategy, it is evident that the fund is suitable for aggressive investors with a very long term horizon minimum of at least 5 years and who wish to plan for their child’s future needs —higher education and wedding.

However, amid times when valuations have scaled up, when the downside risk is high; portfolio construction could be a challenging task. Plus, with RBI changing its monetary policy stance from ‘accommodative’ to ‘neutral’, due to possible inch-up in inflation in the interim, even increasing interest rates in the near future is a possibility; whereby laying bets on longer maturity papers could prove highly risky. This leaves the debt fund manager with short-term and medium-term maturity papers, at least initially in the portfolio construction activity.

The fortune of MMFBVY is closely linked with how astutely the fund manager – both for equity and debt – construct a portfolio. So, although the fund offers a tactical allocation (to both equity and debt as an asset class), the risk that it’ll command will definitely be on a higher side. It is possible that the fund will be subject to high volatility at least in the near future as it endeavours to achieve its stated investment objective. 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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