The Hindu Business Line : OptiMix picks 4 funds for FoF portfolio

OptiMix, the multi-manager division of ING, has picked up equity funds offered by Reliance, DSP Merrill Lynch, Templeton and Sundaram for its first fund of funds (FoF).

OptiMix Income Growth Multi-Manager FoF Scheme, which allotted units in May and has only recently announced its first quarterly numbers, has equity allocations of roughly 4 per cent and 11 per cent respectively in the two options it provides investors - 15 per cent Equity Plan and 30per cent Equity Plan.

Chosen ones

The FoF has chosen Reliance Vision, DSP ML Equity, Sundaram Select Mid Cap, Templeton India Growth and Franklin Bluechip on the equity side. Collectively, these make 9.25 per cent and 15.52 per cent of the AUMs of the two plans.

Debt funds on their part account for roughly 38 per cent and 53 per cent respectively of the 15 per centEquity Plan and the 30 per cent Equity Plan. The funds that have been selected include Kotak Flexi Debt Fund, Principal Income Fund - STP and Prudential ICICI Flexible Income Plan. Further, Reliance Liquid Fund and one of Kotak MF's fixed maturity plans are also included.

OptiMix, according to Mr Ashvin Arora, MD, will maintain "a value and large cap bias to equities". It will also continue to be underweight in mid-caps. On the fixed-income side, the plan is to deal with rising inflation, triggered by increasing oil prices. This has led the fund manager to involve a more dynamic strategy with a view to capture possible drop-offs in longer-term yield. The FoF, Mr Arora has pointed out further, has somewhat curtailed cash allocations.

Corporate bonds stake up

Franklin Bluechip, incidentally, is the largest equity allocation, while Kotak Flexi Debt is the largest allocation on the debt side.

A look at the FoF's figures reveals that corporate bonds account for approximately 18 per cent of both plans, while term deposits comprise 15 per cent and 13 per cent of the 15 per cent Equity and 30 per cent Equity plans. However, the highest allocations are to CPs and CDs - about 28 per cent in both cases. Not surprisingly, AAA-rated (or equivalent) paper comprises 60-62 per cent of their credit profiles.

With regard to equities, OptiMix has indicated that some of the biggest investments of the underlying funds are in auto, construction/materials, engineering/capital goods and infotech. It may be mentioned here that the FoF is benchmarked against Nifty and Crisil Composite Index.