Comments
Mahindra Manulife Mutual Fund’s new fund offer — Mahindra Manulife Focused Equity Yojana — is open for subscription until November 9.
Being an open-ended fund, the scheme will reopen for ongoing purchase shortly after the NFO closes.
Investment strategy
SEBI mandates that focussed category funds invest in only up to 30 stocks. In line with this, the scheme aims to seek long-term capital growth through investments largely in equity and equity-related instruments of up to 30 companies.
The fund will invest across market capitalisations and will be benchmarked against the Nifty 500 TRI.
Ashutosh Bishnoi, MD and CEO, Mahindra Manulife Mutual Fund, believes the Indian economy will see one of the sharpest recoveries in the world from the pandemic, and expects the fund to cash in on the rebound.
The scheme will fill its portfolio from a shortlist of stocks based on filters such as growth prospects, business outlook, cash flows, management, valuation and corporate governance. Bishnoi said the fund is expected to hold stocks for a median period of 18 months. The scheme doesn’t intend to use cash calls frequently and expects to remain fully invested most of the time.
Mahindra Manulife Focused Equity will be managed by Krishna Sanghavi.
Our take
Focussed funds usually choose stocks across market capitalisations and tend to have slightly concentrated holdings as they take exposure to fewer number of stocks. Thus, the success of a focussed scheme depends, to a great extent, on the right stock picks by the fund manager.
This category is suitable only for investors with a high risk appetite and a longer investment horizon, as the picks may sometimes take time to deliver.
The offering by Mahindra Manulife is nothing new as there are already more than 20 focussed funds available in the market.
Focussed funds as a category have delivered average returns of 4.32 per cent, 4.14 per cent and 8.75 per cent over one-, three-, and five-year periods, respectively.
During the same periods, the Nifty 500 TRI delivered returns of 3.87 per cent, 4.14 per cent and 8.45 per cent, respectively, while the Nifty 50 TRI clocked 3.67 per cent, 6.06 per cent and 8.72 per cent, in that order.
As per BusinessLine Portfolio’s Star Track Mutual Fund Ratings , Axis Focused 25 and SBI Focused Equity (both rated five-star) are the two top-performing funds in the focussed category.
Another point to note is that the fund house — a joint venture of Mahindra & Mahindra Financial Services Ltd and Manulife Investment Management (Singapore) Pte Ltd — is a relatively new entrant that has about 14 schemes across equity and debt, all with less than five-year track records.
Amongst the asset management company’s schemes that has a minimum of a three-year track record, one hybrid scheme (Equity Savings) and two debt funds (Liquid and Low Duration) are among the top quartile schemes in their respective categories.
Performance of the AMC’s equity schemes (the category to which the focussed fund belongs), such as an ELSS and a multi-cap fund, has been modest.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.