Pramerica Diversified Equity Fund

An open-ended equity scheme with the primary objective of building wealth and generating return by investing in diversified equities.

Summary

Type	An open-ended diversified equities fund.	Benchmark Index	S&P BSE 200 Index
Min. Investment: Additional purchase:	Lump sum -> Rs 5,000 and in multiples of Re 1 thereafter Rs 500 and in multiples of Re 1 thereafter	Plans: Options (under each plan):	Direct; and Regular   Dividend Reinvestment facility; Dividend Payout facility; Dividend Transfer facility.
Face Value	Rs 10 per unit	Expense Ratio:	Upto 2.50%*
Entry Load	Nil	Exit Load:	If units are redeemed/switched out on or before 365 days from the date of allotment - 1.00%; If units are redeemed/switched out after 365 days from the date of allotment – Nil.
Issue Opens	February 11, 2015	Issue Closes:	February 25, 2015

*The Direct Plan under the Scheme shall have a lower expense ratio as compared to the Regular Plan, excluding the distribution expenses, commission, etc. related to distributors. The Direct Plan shall also have separate NAV.  

Investment Objective*

The investment objective of the scheme is "to generate income & capital appreciation by predominantly investing in an actively managed diversified portfolio of equity & equity related instruments including derivatives. However, there is no assurance that the investment objective shall be realized."

*Source: Scheme Information Document

 

Is this fund for you?

Pramerica diversified equity fund from Pramerica mutual fund is a diversified equity scheme launched with the intention of generating long term appreciation of capital by investing in stocks from across sectors using a bottom up approach of investing. The Scheme will actively manage a diversified portfolio of strong growth companies with sustainable business models.

Since investing requires disciplined risk management, the AMC would incorporate safeguards seeking to control risks in the portfolio construction process. If the fund manager deems prudent then a portion of the portfolio will also be hedged using derivative instruments. a smaller part of the portfolio of the Scheme will be invested in money market instruments and debt securities issued by corporates and/or State and Central Government. This component of the portfolio will provide the necessary liquidity to meet redemption needs and other liquidity requirements of the Scheme.

The investment manager will select stocks based on a bottom up approach across the market cap spectrum, with consideration given to price–to–earnings, price–to–book, and price–to–sales ratios, as well as growth, margins, asset returns, and cash flows, amongst others.

 

Portfolio Strategy

The asset allocation which will be followed by the fund will be as under:
 

Instruments	Allocation Range (%)		Risk Profile High/Medium/Low
	Minimum	Maximum
Equity & Equity Related Instruments	65	100	High
Cash, Money Market, Debt Securities, Liquid & Debt schemes of Pramerica Mutual Fund.	0	35	Low to medium

Notes: *The Scheme does not intend to invest in overseas/foreign securities, securitized debt, derivatives in fixed income instruments and repos/ reverse repos in corporate bonds.
The Scheme may also engage in securities lending; provided however that the Scheme shall not deploy more than 20% of its net assets in securities lending and not more than 5% of the net assets of the Scheme will deployed in securities lending to any single counterparty.
The Maximum exposure to derivatives shall not exceed 50% of net assets of the scheme. The Scheme may take derivatives position based on the opportunities available subject to the guidelines issued by SEBI from time to time and in line with the investment objective of the Scheme.

 

PDEF will benchmark its performance to the S&P BSE 200 Index, which is a broad-based index and since its composition broadly represents the scheme’s investment universe.

 

Fund Manager Profile

Mr. Brahmaprakash Singh has over 19 years of experience in broad based investment management, including portfolio management of equity schemes with a bottom-up investment style. He is currently the Executive Director & CIO – Equity - Pramerica Asset Managers Private Limited (Aug 22, 2012 till date).

 

Fund Outlook

At present stock markets appear to be overvalued and they factor in almost all likely positives. However, markets are yet to factor in some probable negatives. In case, Federal Reserve (Fed) decides to hike interest rates, capital may flow out of emerging markets including the Indian markets. Sharp outflow of foreign capital may result in unexpectedly deeper correction. Furthermore, situation in Europe still remains fragile. Although Grexit (threat of Greece exiting Eurozone) has waned for now; the underlying problem has not yet vanished. Stock markets may stay volatile post budget. In worst case, if budget fails to fulfil the expectation of investors and corporate profits continue to remain depressed even over next few quarters, markets might fail to sustain current valuations and may eventually fall.

Under such tough market conditions, PDEF may find it difficult to deal with excess volatility that may arise on account of change in the market sentiment. Pramerica as a fund house is yet to complete 5 years of operations in India. Track record of the fund house so far, has not been encouraging either.

 

To know whether to invest in this NFO please subscribe here. If you are already a subscriber then please login here

Add Comments