An open-ended equity scheme with primary objective of wealth creation and aims to invest in equity and equity related instruments including equity derivatives, debt and money market instruments.

Summary

Type	An Open Ended Equity Scheme	Benchmark Index	CRISIL Balanced Fund Index
Min. investment:	-Lump sum Rs 5,000/- and multiples of Rs 1 thereafter - Systematic Investment Plan - Rs 1000 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	Nil	Exit Load:	Nil
Issue Opens	September 6, 2016	Issue Closes:	September 20, 2016

 

Investment Objective*

The schemes' investment objective is to generate long term capital appreciation by investing in equity and equity related instruments including equity derivatives as well as debt instruments.

However, there can be no assurance or guarantee that the investment objective of the Scheme would be achieved.

 

*Source: Scheme Information Document

 

Is this fund for you?

Motilal Oswal MOSt Focused Dynamic Equity Fund (MFDEF) is an open-ended equity oriented fund, which under normal circumstances the aims to invest minimum 65% of its assets in equity & equity related instruments and further the investment mandate permits investments upto 35% of its assets in derivative instruments to take advantage of volatile market conditions. The asset allocation shall be reviewed twice a month for portfolio rebalancing and hedging purposes.

The fund will also invest in debt instruments (upto 35%) including government securities, corporate debt, other debt instruments and money market instruments of various maturities. The scheme intends to provide liquidity and minimize credit risk. Money market instruments include T-Bills, CBLOs & Repo/ Reverse Repo.

The dynamic equity funds change their asset allocation across the asset classes as per the prevailing market condition. These funds allocate less in equities when market valuations appear expensive and more when cheap. The fund will use its internal valuation parameter, the Motilal Oswal Value Index (MOVI) as an indicator for asset allocation between equities, arbitrage, derivatives strategies and debt. MOVI is calculated using daily moving average of Price to Earnings Ratio (P/E), Price to Book Value (P/B) and Dividend Yield of the Nifty 50 Index. Thus MOVI helps in gauging the attractiveness of equity market. But any change in the methodology of MOVI would construe change in investment strategy as well.

Based on the above, MFDEF is suitable for investors with a very high risk appetite, who have a long-term investment horizon of at least 5 years in their pursuit of wealth creation. Also, as the fund will never have equity holdings below 65% it will enjoy favourable tax treatment like other pure equity funds. 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	65	100	High
Equity Derivatives	0	35	Low to Medium
Debt & Money market instruments	0	35	Low to Medium

*Source: Scheme Information Document  

Further it is stated in the offer document that:

 

• The core long equity exposure shall be minimum of 30% of value of total assets. Long equity exposure means exposure to equity alone without a corresponding equity derivative exposure.
• The scheme may engage its net assets upto 20% in stock lending. Also not more than 5% of the net assets would be deployed in lending stock with single counter party.
• The scheme will not invest in foreign securities, corporate debt repo, corporate reverse repo, credit default swaps(CDS) and foreign securitized debt. The scheme shall also not undertake short selling.

 

Also, it may be noted that the asset allocation percentages stated above are only indicative and not absolute.

 

What investment strategies will the fund follow?

In the endeavour to achieve the investment objective set out, MFDEF will follow the below mentioned investment strategy...

For Equity Investments:
MFDEF under normal conditions would invest 65-100% of its assets in equity and equity related instruments across various market capitalisations, levels and sectors. It shall follow active investment style using a bottom-up approach in stock selection based on 'Buy Right: Sit Tight' investment philosophy. The Fund managers shall identify and invest in shares of businesses run by high quality management & having sustainable and scalable business models thus using QGLP (Quality, Growth, Longevity & Price) as the key evaluation parameters. It intends to invest in high quality businesses with long term growth potential. The fund's portfolio shall comprise of high conviction stock ideas. Therefore, the fund's portfolio may be potentially concentrated in a few market capitalization levels/sectors which are expected to do well and have a lower downside risk.

For Arbitrage and Derivative Strategies:
In volatile market conditions the fund aims to capitalise the risks by investing in Cash/Futures Arbitrage opportunities. The fund may buy derivatives including Index Futures, Stock Futures, Index Options and Stock Options. The fund will not invest in derivative products like Credit Default Swaps and other foreign securities.

To construct a portfolio of debt securities, BAMEDF will follow five stage investment process:

For Debt Investments:
The Fund shall invest in various types of permitted Debt Instruments including Government Securities, Corporate Debt, Other debt instruments and Money Market Instruments of various maturities and ratings with the objective of providing liquidity and achieving optimal returns.

 

---

Fund Manager Profile

 

Mr Taher Badshah (For Equity Portion): He has over 19 years of experience in fund management and investment research. He holds a Bachelor's degree in Engineering (B.E.) in Electronics and has done Masters in Management Studies (MMS) in Finance from Mumbai University.

Mr Abhiroop Mukherjee: He has over 9 years of experience in Fixed Income Securities trading and fund management. He holds a Bachelors' degree in Commerce (B.Com) and Post Graduate Diploma in Business Management (PGDBM) in Finance.

 

---

Fund Outlook

 

After evaluating the fund's objective, investment and portfolio strategy, it is clear that MFDEF will largely invest in equity & equity related instruments. Hence its fortune will be closely linked to stocks across all market capitalisations. But being a dynamic equity fund, it possesses the flexibility of investing between asset classes to take advantage of price movements in each asset class. Dynamic funds rebalance their equity portfolio when markets ascend and vice-versa. So, the fund manager of a dynamic fund takes charge of rebalancing the portfolio as per the market conditions on regular basis and investors are not required to time the market levels as well.

Given the global cues -- 'Brexit', China's economic slowdown, morose economic conditions in Japan, Federal Reserve's endeavour to normalise interest, amongst host of others; turbulence would be witnessed by the market, and during such times, volatility will be expected. For market to be unimpeded the domestic macroeconomic variables need to be encouraging. The path to interest rates would also decide the construction of the debt portfolio.

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. But MFDEF is expected to carry high risk while achieving its investment objective.

 

---

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.

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

 

© Quanutm Information Services Pvt. Ltd. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of PersonalFN is strictly prohibited and shall be deemed to be copyright infringement.

Disclaimer: Quantum Information Services Pvt. Limited (PersonalFN) is not providing any investment advice through this service and, does not constitute or is not intended to constitute an offer to buy or sell, or a solicitation to an offer to buy or sell financial products, units or securities. All content and information is provided on an 'As Is' basis by PersonalFN. Information herein is believed to be reliable but PersonalFN does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. PersonalFN and its subsidiaries / affiliates / sponsors or employees, personnel, directors will not be responsible for any direct / indirect loss or liability incurred by the user as a consequence of him or any other person on his behalf taking any investment decisions based on the contents and information provided herein. This is not a specific advisory service to meet the requirements of a specific client. Use of this information is at the user's own risk. The user must make his own investment decisions based on his specific investment objective and financial position and using such independent advisors as he believes necessary. All intellectual property rights emerging from this newsletter are and shall remain with PersonalFN. This is for your personal use and you shall not resell, copy, or redistribute this newsletter or any part of it, or use it for any commercial purpose. The performance data quoted represents past performance and does not guarantee future results. As a condition to accessing PersonalFN's content and website, you agree to our Terms and Conditions of Use, available here.

Quantum Information Services Pvt. Ltd. 101, Raheja Chambers, 213, Nariman Point, Mumbai - 400021. Tel: +91 22 6136 1200
Website : www.personalfn.com CIN: U65990MH1989PTC054667

Add Comments