Wednesday, January 31, 2018

EDELWEISS MAIDEN OPPORTUNITIES FUND NFO - NFO FOR AN IPO!!

Greetings!!
NFOs keep coming dime a dozen. In fact, there is at least 1 single fund which hit the market every week. I choose to deliberately ignore all of them as every NFO is a copycat of one already existing in the Market.
A  Quality NFO with Strong name attached to it and one which has got something UNIQUE to offer comes along once in a Bluemoon and as and when it does it comes.....its then SRIKANTH MATRUBAI comes into the picture to write on it.

Exactly such a fund is the New Fund Offer from Edelweiss namely EDELWEISS MAIDEN OPPORTUNITIES FUND – Series 1

 
In the past, I do have written on good funds like Mirae Asset Prudence Fund, Reliance Small Cap Fund, Motilal Oswal Most Focused Multicap 35 Fund, etc
What is the Fund all about?  Let’s study a bit
The Edelweiss Maiden Opportunities Fund is a first of its kind alternative made available for retail investors that allows access to investing number of quality IPOs

Speaking to SRIKAVI WEALTH, the CEO of Edelweiss AMC, Radhika Gupta says “the fund aims to FOCUS on 25-30 Ideas from upcoming IPOs and recently listed ones too”.
She explained that Unique Investment Opportunities that will come play out the India’s Growth Story are expected from Unlisted Sectors and recent new entrants to Stock Markets like the Life Insurance, General Insurance, Asset Management companies, etc.
She further pointed out that BSE IPO Index has outperformed Nifty 500 TRI by a whopping 104% since the start of this Bull Cycle (June 2014)

She also revealed that the Fund will be Hedged from Day 1 aiming to protect against Falling Markets thorugh Put Option


WHY TO INVEST IN THIS FUND ?

1. True Exposure :

One could argue that an existing fund too participates in an IPO is true but its also a fact that the Average Exposure  was in a range of 1% to 2% max which is highly unlikely to make any significant impact on the NAV.
With a dedicated IPO fund the exposure will be truly into the IPOs and one gets the opportunity to ride the IPO wave.
D-Mart which gave 294% returns had been invested by 59 funds but with a pathetic average holding of less than 1% exposure by Diversified Equity Fund
Now...with its 294% returns..due to this less than 1% holding, the positive impact on the NAV will be next to nothing.
This Fund will ensure that you truly participate in Quality IPOs


             2. NOT JUST ENTRY BUT EXIT TOO!
                 It is not just entering but EXIT that actually determines how much returns you have made.
 Data released by Edelweiss that majority of investors tend to exit on Listing Day to lock in gains losing out on the Further Gains when the Stock Price of the IPO company grows.  The Difference has been huge. Listing Day gain is 49% whereas the 1 year gain is 82% (Top Quartile)




                3. CLOSE ENDED WORKS IN INVESTOR FAVOUR
                   Fund being Close Ended actually works in favour of the Fund as the Fund Manager is saved from the hassles of investors redeeming (booking profits) and indirectly forcing the Fund Manager to avoid taking a LONG TERM. 

                5. COULD HAVE LOWER EXPENSE
                  Close Ended funds tend to have less churning and hence scope for Lower Expense Ratio which ultimately could result in better returns.

                6. EASY WAY TO PARTICIPATE IN IPOs
               Majority of retail investors fail to get allotments in High Quality IPOs (D-Mart, HDFC Life,etc) due to huge oversubscription and they could avoid this disappointment and participate in growth stories by investing in this fund.  IPOs are giving BRILLIANT return, but the investors do not get allotment

7.       DONT NEED HUGE MONEY
Access to Large number of Good Quality IPOs with limited money (as small as Rs.5000). In fact, some investors just to get allotment even go for Margin Funding which increases their cost of acquisition.


8.       STRONG IPOs in Pipeline
A very strong pipeline of IPOs lined up in near future like HDFC Mutual Fund, ICICI Securities, NSE,NSDL, Hindustan Aeronautics, Reliance General Insurance,Bandhan Bank, Prince Pipes and Fittings , Achme Solar Holding Limited etc.


WHY NOT TO INVEST IN THIS FUND

1.       Since its a New Fund, there is no Track Record. Moreover lack of quality IPOs may leave the fund Manager with little choice to deploy fund.
2.       Close Ended means you can only invest via Lumpsum and thus investors are depreived of benefits of Rupee Cost Averaging. Lumpsum investments also carry the risk of TIMINGthe investment (Though the fund manager may avoid this by staggering the investments)
3.       Since the fund is Close Ended, even the Fund manager will not get FRESH Inflows due to absence of SIPs and he will be helpless to invest further amounts of money in case of Quality stocks becoming available at cheaper prices dur to Market correction or otherwise.


Additional Details :  
NFO Period:  2nd Feb to 16th Feb 2018
Minimum Investment: Rs.5,000/-
Fund Type: Multicap Fund (Investment will be spread across various market caps)
Lock-In: Close ended fund with a 3.6 Year Lock-In
Benchmark: Nifty 500.
The fund will be managed by Bharat Lahoti and Bhavesh Jain


COMMENTS AND SUGGESTION :
The rationale for my excitement towards this Fund is the space the fund aims to invest in....the IPOs.
The recent reforms, pent-up capital, PSU divestments, the strong participation by FIIs only reinforces my

If you are ready to ride out the volatility and impressed with track record of Edelweiss AMC, then this fund is for you.
Most of the so called “EXPERTS” blindly run down a New Fund Offer, however good it may be.
In fact, they compete with each other in criticising an NFO.
The actual fact that everyone misses is that even the BEST performing fund was once a New Fund Offer!!!
If you check any Research Website, the Top ranked funds that stand out are Mirae Asset Emerging BlueChip Fund, SBI Small & Midcap Fund
Both these funds were given a POSITIVE opinion by me and these  so called EXPERTS did not mention a word about these funds.

In fact, SBI Small & Mid CapFund was given a MISS by all these so called EXPERTS. 
I had made all investors with appropriate risk appetite invest in this fund when its name was DAIWA INDUSTRY LEADERS FUND...an unknown name in the Industry.

Those who followed the words of these so called EXPERTS are still waiting for returns...my readers and investors are laughing all the way to bank.


EDELWEISS MAIDEN OPPORTUNITIES FUND looks to be best way to participate in India’s IPO Growth story.
I will not be surprised if more Fund Houses come up with a Fund similar to this Edelweiss Maiden Opportunities fund..it is that good!!

And Edelweiss has done exceedingly well with all its funds and there is no reason to believe it cannot replicate its success with this fund especially since their Parent are experts in IPOs by way of being Lead Managers
IPOs are not just Initial Public Offers but are truly India’s Prospective Opportunities and this fund will be a good way to participate in the same.


Caveat : This fund is suitable for aggressive investors who have High Risk-Appetite and okay with the lock in of 3.4 years.
Please read the Offer Documents carefully before investing.
Mutual Funds are subject to Market Risk
Please consult a competent Mutual Fund Distributor before investing.
All the best.






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