An open-ended equity fund with a concentrated portfolio of upto 25 stocks.

Summary

Type	An Open ended equity Scheme	Benchmark Index	Nifty 100
Min. investment:	- Rs.5, 000/- & in multiples of Re. 1 thereafter - Additional purchase: Rs 1000 and in multiples of Re 1 thereafter	Plans: Options:	Regular Plan Direct Plan Options under each plan Growth* Dividend Dividend payout Dividend Reinvestment *Growth is Default option
Face Value	Rs 10 per unit	Expense Ratio:	Upto 2.50%
Entry Load	Nil	Exit Load:	If units of the Scheme are redeemed or switched out up to 10% of the units (the limit) within 12 months from the date of allotment - Nil If units of the scheme are redeemed or switched out in excess of the limit within 12 months from the date of allotment - 1% of the applicable NAV If units of scheme are redeemed or switched out after 12 months from the date of allotment - Nil.
Issue Opens	September 25, 2017	Issue Closes	September 29, 2017

Investment Objective*

The Scheme seeks to generate long-term capital growth by investing in a concentrated portfolio of equity & equity related instruments of up to 25 companies and the balance in debt securities & money market instruments.

However, there can be no assurance that the investment objectives of the scheme will be realized. The Scheme does not guarantee/indicate any returns.

*Source: Scheme Information Document

Is this fund for you?

The BNP Paribas Focused 25 Equity Fund (BPFEF) is a focused equity oriented fund with an exposure of upto 25 stocks and rest in the money market and debt securities. The objective of the scheme is to generate long-term capital growth for its investors.

It will be an actively managed portfolio of equity and equity related securities and seeks to add best opportunities available in the market without any sector bias. Further the scheme will invest in large and mid-cap companies.

As the portfolio of this scheme will be concentrated to a few stocks, investors will be exposed to concentration risk. Also, the scheme is expected to have higher liquidity risk due to portfolio concentration.

Hence, the fund is suitable for investors with high risk appetite and long-term investment horizon of at least 5 years. As the fund aims to hold minimum 65% of its net assets into equity, it will enjoy favourable tax treatment like other pure equity funds. This fund is best suited for investors who can assume high risk in an anticipation of high returns in future.

The asset allocation under normal circumstances will be as under:

Instruments	Indicative allocations (% of total assets)		Risk Profile High/Medium/Low
	Minimum	Maximum
Equity and Equity related securities, (which are not exceeding 25 companies) Of which minimum 65% of equity net assets will be companies among Nifty 100 by market Capitalization	65	100	High
Debt and Money Market Instruments	0	35	Low to Medium

Further it is stated in the offer document that:

• Exposure to debt derivative instruments shall not be more than 15% of the total net assets only for hedging and portfolio balancing.
• Exposure to equity derivatives shall be only for hedging and portfolio balancing up to 30% of total net assets.
• The Scheme will not indulge in short selling and securities lending and borrowing.
• The Scheme will not invest in foreign securities including foreign securitised debt and ADR/GDR.
• The Scheme will not invest in securitized debt.
• The Scheme will not participate in Credit Default Swaps (CDS) for Corporate Bonds.

(*Source: Scheme Information Document)

What investment strategies will the fund follow?

Being an open-ended focused equity fund, BPFEF will follow a concentrated approach to stock selection. It aims to hold upto 25 stocks in the portfolio and remaining assets will be held into debt and money market securities.

For equity allocation:

Being a concentrated fund, it is mandated to invest around 65% -100% of its net assets in equity and equity related securities. Out of which minimum 65% of net equity assets will be of companies among Nifty 100 by market capitalization. It won't have any sectoral bias.

Further, the scheme will follow bottom-up approach in its stock selection process. It will choose companies across sectors. It will select companies that have demonstrated market leadership, have strong financials and quality management. Additionally, companies which have potential to create wealth for their shareholders by delivering performance through ups and downs of the market.

Portfolio will be built of both value and growth companies, with an overall analysis of business fundamentals, the company's financial strength, industry structure, future earnings expectations and sensitivity of earnings.

For debt allocation:

The exposure to debt & money market instruments will be in the range of 0%-35% of the net assets. The debt portion of the portfolio will be actively based on the AMCs overall view on interest rates. As there is an inverse relationship between interest rates and price of debt securities AMC forms views on likely movement of interest rates and portfolio is constructed accordingly. Hence, by actively managing the portfolio, scheme attempts to achieve its objective through both interest yield and capital appreciation.

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Fund Manager Profile

The fund will be jointly managed by Mr. Karthikraj Lakshmanan and Mr Abhijeet Dey.

Mr. Karthikraj Lakshmanan is Sr. Fund Manager (Equity) at BNP Paribas Asset Management India Private Limited, with almost 10 years of experience in the industry. He is Commerce graduate (B.Com), Chartered Accountant (CA) and holds a PGDM (from SPJIMR, Mumbai). Plus, he has cleared CFA Level 3 (US CFAI).

Mr Abhijeet Dey is a Senior Fund Manager at BNP Paribas Asset Management India Private Limited with almost 13 years of mutual fund industry experience. He is Bachelors of Engineering (Mechanical) and holds Masters of Management Studies from Mumbai University.

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Fund Outlook

After evaluating the fund's objective and investment strategy, it is clear that BPFEF will have large exposure to equity and equity related instruments. Further, as the fund aims to hold only upto 25 stocks, the fortune of the fund is closely dependent on fund manager's ability to pick best opportunities every single time.

A number of equity schemes maintain a focused or concentrated stock portfolio. While some have done exceedingly well, others have faltered. A few sour stocks can create a drag on returns. Therefore, while these schemes come with the promise potentially high returns, the risk involved is even higher.

Given the global cues – The US–North Korea tension, downtrend of international oil prices, etc. its undercurrents might spill over to the Indian market as well. And looking at these situations, concentrated fund looks like a risky bet. Being a focused fund, it may not pursue much diversification. And hence, investors will face higher amount of liquidity risk. Further, the scheme maybe more sensitive to any kind of business, economic or political news which may result into sizeable fluctuation in the Net Asset Value (NAV) of the scheme.

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

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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
Website : www.personalfn.com CIN: U65990MH1989PTC054667

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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

SEBI-registered Investment Adviser. Registration No. INA000000680, SEBI (Investment Advisers) Regulation, 2013

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