Pramerica Midcap Opportunities Fund

An open-ended equity scheme with a mandate to invest predominantly in stocks in the mid cap domain.

Summary

Type	An open-ended equity scheme	Benchmark Index	CNX Midcap Index
Min. Investment:	lump sum -> Rs 5,000 and in multiples of Re 1 thereafter Systematic Investment Plan (SIP) Monthly frequency: Rs 500 each and in multiples of Rs 100 thereafter (minimum 10 instalments) Quarterly frequency: Rs 1000 each and in multiples of Rs 100 thereafter (minimum 5 instalments)	Minimum Additional Purchase:	Rs 500 and in multiples of Re 1 thereafter
Face Value	Rs 10 per unit	Options available:	Growth, Dividend Payout and Dividend Reinvestment
Entry Load	Nil	Exit Load:	1.00% if the units are redeemed/switched out on or before 365 days from the date of allotment Nil if units are redeemed/switched out after 365 days of allotment
Issue Opens	November 11, 2013	Issue Closes:	November 25, 2013

 

Investment Objective*

The primary investment objective of the scheme is "to achieve long-term capital appreciation by predominantly investing in equity & equity related instruments of mid cap companies. However, there is no assurance that the investment objective of the Scheme will be realized and the Scheme does not assure or guarantee any returns."

*Source: Scheme Information Document

 

Is this fund for you?

Pramerica Midcap Opportunities Fund (PMOF) is an open-ended equity mutual fund scheme from the stable of Pramerica Mutual Fund, having a mandate to invest predominantly in stocks in the mid cap domain.

Mid cap stocks are the companies which fall below the large caps but above the smaller companies in the market capitalisation pyramid. These are the companies which are not as established as the large cap ones, but unlike mature large caps, such companies tend to have a higher growth potential and are often available at a discount to large caps. Such companies are well-established as compared to the small caps with better reach and revenues. Mid caps offer the potential of being future large caps, but careful portfolio construction and long-term investment horizon is needed. It is noteworthy that, very few companies actually manage to zoom past the competitors when the going gets tough for them. For this reason, investing in mid caps is perceived to carry very high risk. Therefore before investing one's hard earned money, it is imperative to take into account his / her risk appetite and risk tolerance.

 

Portfolio & Investment Strategy

PMOF while building its portfolio would follow a combination of top-down and bottom-up approach to stock picking with consideration given to the following aspects amongst others:

 

• Price-to-earnings
• Price-to-book value
• Price-to-sales
• Growth potential
• Margins
• Asset returns
• Cash flows
   

PMOF may also use a disciplined quantitative analysis of financial operating statistics. While selecting investment opportunities for the portfolio, the investment manager will conduct in-house research in order to identify various investment opportunities.

The company-wise analysis will focus on the following aspects amongst others:

 

• Historical and current financial condition
• Potential value creation / unlocking of value and impact on earnings growth
• Capital structure
• Business prospects
• Policy environment
• Responsiveness to business conditions
• Product profile
• Brand equity
• Market share
• Competitive edge
• Technology know-how
• Transparency in corporate governance
• Strength of management
   

Apart from investing predominantly in stocks in the mid cap domain, PMOF will also invest in small cap stocks to tap high growth opportunities offered by such stocks. Likewise, PMOF may also invest in large cap stocks.

Under normal circumstances the asset allocation pattern of PMOF will be as under:

 

Instruments	Allocation Range (%)		Risk Profile High/Medium/Low
	Minimum	Maximum
Equity and equity related instruments of Mid Cap Companies	65	100	High
Equity and equity related instruments of Large cap and Small Cap Companies	0	35	High
Cash, Money Market, Debt Securities, Liquid & Debt Schemes of Pramerica Mutual Fund	0	35	Low to Medium

Note: Midcap stocks are defined as stocks within the market cap range of the benchmark index (CNX Midcap Index) of the Scheme and which may or may not be a constituent of the benchmark Index.
(Source: Scheme Information Document)  

Moreover, derivative instruments (as permissible under the applicable regulations) may also be held by PMOF to hedge whole or part of the portfolio.

 

Fund Manager Profile

The equity portion of the fund's investments will be managed by Mr Brahmaprakash Singh, who is also the Executive Director & Chief Investment Officer (CIO) for equity investments. Mr Singh has over 18 years of experience in broad based investment management, including portfolio management of equity schemes with a bottom-up investment style. Prior to joining Pramerica Mutual Fund (in August 2012), Mr Singh has worked at BCP Advisors Private Limited (as a CIO), Atlantis Investment Advisors (India) Limited (as Managing Director & Portfolio Advisor) and Deutsche Asset Management (India) Pvt. Limited (as Head of Equities). He has to his credit, a Masters in Management Studies (MMS) degree. At present with Pramerica Mutual Fund, he also manages the equity portion of Pramerica Large Cap Equity Fund, Pramerica Dynamic Asset Allocation Fund and Pramerica Dynamic Monthly Income Fund.

The debt portion of the fund's investments will be managed by Mr Mahendra Jajoo, who is also the Executive Director & Chief Investment Officer (CIO) for fixed income investments. Mr Jajoo has over 20 years of experience in financial services and capital markets. Prior to joining Pramerica Mutual Fund (in January 2010), Mr Jajoo has worked at Tata Mutual Fund (as Head - Fixed Income and Structured Products), ABN AMRO Asset Management (India) (as CIO - Fixed Income and Structured Products) and ABN AMRO Securities India Private Limited (as Head - Primary Dealership). He is a graduate in commerce (B.Com), Chartered Accountant (CA) and has to his credit CFA charter. At Pramerica Mutual Fund he also manages Pramerica Liquid Fund, Pramerica Ultra Short Term Bond Fund, Pramerica Short Term Income Fund, Pramerica Treasury Advantage Fund, Pramerica Credit Opportunities Fund, Pramerica Dynamic Bond Fund, Pramerica Short Term Floating Rate Fund, Pramerica Fixed Duration Fund (series 5, 6, 7, 8, 10, 13 & 14) Pramerica Dynamic Monthly Income Fund (debt portion), Pramerica Large Cap Equity Fund (debt portion) and Pramerica Dynamic Asset Allocation Fund (debt portion).

 

Fund Outlook

PMOF's proclivity to stocks in the mid cap domain, would attract risk of investing (such as high volatility, especially when the going gets tough for them which reflects in their profits), even though PMOF would follow a combination of bottom-up and to-down approach to stock picking and follows a research driven approach thereto. Thus the fortune of PMOF would be closely linked with the performance of the mid cap index and will always command to be a very high risk investment proposition. Also, given the nature of the scheme and its market capitalisation bias of investing in mid cap companies, PMOF may see high portfolio turnover which may consequently result in higher brokerage and transaction costs.

 

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