NFO Review: Mahindra Mutual Fund Dhan Sanchay Yojana
Jan 14, 2017

Author: PersonalFN Content & Research Team

An open-ended equity oriented fund with an objective to generate long term capital appreciation and income through investments in equity and equity related instruments, arbitrage opportunities, and investments in debt and money market instruments.

Summary

Type	An Open ended equity Scheme	Benchmark Index	45% Nifty Index + 55% 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 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% if redeemed/ switched-out upto 1 year from the date of allotment
Issue Opens	January 10, 2017	Issue Closes:	January 24, 2017

Investment Objective*

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

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 Dhan Sanchay Yojana (MMFDSY) is an open-ended equity fund which under normal circumstances is mandated to invest upto 85% of its net assets in equity & equity related assets. Within this range, the fund might also hedge its equity positions by investing in derivatives such as index futures, stock futures, index options & stock options etc. by allocating upto 20% of its assets to such instruments. Further, in the endeavour to generate long term income with accrual and capital appreciation, MMFDSY will invest upto 35% of its net assets in debt and money market instruments. If the fund manager feels debt/money market instruments would offer better returns than the arbitrage opportunities, MMFDSY's portfolio would even lower equity exposure, and under such defensive stance may invest upto 65% in debt and money market instruments.

Hence, MMFDSY is suitable for investors only with a high risk appetite, who have a long-term investment horizon of at least 5 years.

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.

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
Instruments	Minimum	Maximum	Risk Profile High/Medium/Low
Equity and Equity related Securities^ of which	65%	85%	High
(i) Equity and Equity related securities (unhedged)*	35%	50%	High
(ii) Equities, equity related securities and derivatives including index futures, stock futures, index options, & stock options, etc. as part of hedged / arbitrage exposure *	15%	35%	Medium to High
Debt and Money Market instruments	0%	35%	Low to Medium

(*Source: Scheme Information Document)

However, if the debt / money market instruments offer better returns than the arbitrage opportunities available in cash and derivatives segments of equity markets then the fund manager may choose to have a lower equity exposure. The fund under defensive circumstances will allocate its assets as per the below table:

Instruments	Indicative allocations (% of total assets)		Risk Profile High/Medium/Low
Instruments	Minimum	Maximum	Risk Profile High/Medium/Low
Equity and Equity related Securities^ of which	35%	70%	High
(i) Equity and Equity related securities (unhedged)*	35%	50%	High
(ii) Equities, equity related securities and derivatives including index futures, stock futures, index options, & stock options, etc. as part of hedged / arbitrage exposure *	0%	20%	Medium to High
Debt and Money Market instruments	35%	65%	Low to Medium

(*Source: Scheme Information Document)

*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 50% of the net assets. 20

^The Scheme may also use derivatives for such purposes as maybe permitted by the Regulations, including for the purpose of hedging and portfolio balancing, based on the opportunities available and subject to guidelines issued by SEBI from time to time. The Scheme may also use fixed income derivative instruments subject to the guidelines as maybe issued by SEBI and RBI and for such purposes as maybe permitted from time to time.

Further, the offer document states that:

- The Scheme shall not invest in securitised debt, credit default swaps, repos in corporate bonds and shall not engage into stock lending/short selling
- The Scheme does not propose to invest in foreign securities
- The Scheme shall not invest more than 10% of its NAV in the equity shares or equity related instruments of any company
- The Scheme shall not invest more than 5% of its NAV in the unlisted equity shares or equity related instruments
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.
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.
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
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.

What investment strategies will the fund follow?

Fund Manager Profile

Fund Outlook

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

Disclosure with regard to ownership and material conflicts of interest

Disclosure with regard to receipt of Compensation

General disclosure

Subject Company means Mutual Fund Schemes

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