Skip to main content

Mutual Fund Review: IDFC Strategic Sector (50:50) Equity

IDFC Strategic Sector (50:50) Equity is relatively new and needs to be watched for some more time to assess its performance

 

A diversified equity mutual fund scheme usually seeks to distribute investments across various sectors and market capitalisation. A sector specific equity mutual fund scheme, on the other hand, seeks to optimise returns by concentrating its synergies on one particular sector.IDFC Asset Management Company has attempted to club both these concepts by launching a product that not only seeks to diversify across sectors but also lays special emphasis on one particular sector.


   IDFC Strategic Sector (50:50) Equity scheme invests up to 50% of its assets in
one chosen sector of the season and the balance 50% across various other equity sectors.So, has this experiment of launching a product, which is both sectoral and diversified in structure, worked for IDFC? And is 'Strategic Sector (50:50) Equity' indeed worth your money? Let's check out.

PERFORMANCE:

Launched in October 2008, IDFC Strategic Sector (50:50) Equity is a relatively new scheme, yet to complete three years of existence. It thus lacks a strong performance track record, imperative for any MF scheme to gain investor confidence. Its performance in the past twoand-a-half years has shown a remarkable improvement and the fund has moved from being an underperformer to an average performer over this period. In 2009, it clocked gains of about 52%, But the Sensex and the Nifty returned about 81% and 76%, respectively, in that year while the category of large-cap equity schemes, on an average, returned about 71% then. IDFC Strategic Sector (50:50) Equity has been placed under the category of large-cap equity schemes given its high exposure to large-cap scrips.One of the reasons for the fund's underperformance in 2009 can be attributed to the choice of its major sector then — oil and gas.


   It was thus not surprising to see this fund change gears and move to financial services as its major sector towards the end of 2009.In 2010, the fund gained 23%, surpassing the 17-18% returns by the major bourses as well as the average returns of about 17% by the category of large-cap equity funds. A high exposure to the banking sector definitely seems to have worked for this scheme with the BSE Bankex rising by more than 33% last year.In the current year, so far, the scheme's net asset value dropped 10%.

PORTFOLIO:

AUM of IDFC Strategic Sector have grown from 15 crore at the time of launch in October 2008 to about 37 crore today. The fund has restricted itself to investing only in wellrecognised large-cap companies that fairly reduces its risk quotient. Even within its major sector, which is banking and financial services at present, the fund has limited its investment to some of the top banking and financial services scrips, including Axis Bank, HDFC Bank, ICICI Bank, Yes Bank, BoB, PNB and Shriram Transport Finance Company. The financial Services sector account for about 35% of the fund's portfolio. Its other important sectoral investments include technology and energy. While the fund has a decent mix of sectors, it has limited its options when it comes to choosing stocks for its portfolio. Investors may thus find its portfolio a bit concentrated with just about 20-22 scrips. This focus is, however, justified by the fund's extremely small asset base of less than 40 crore.

OUR VIEW:

The fund is an experimental venture, trying to club the best of both themes - sectoral as well as diversified. This scheme, however, carries an inherent risk as far as picking up the right sector at the appropriate time is concerned. So far, this scheme has put a decent show, making a remarkable recovery after a lack lus-tre start. The fund, however, is relatively new and needs to be watched for some more time to assess whether the dual theme strategy will really work for the investor.

 

Popular posts from this blog

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...

What are the factors affect the changes in Interest Rate of Fixed Deposits?

  What are the factors affect the changes in rate of Fixed Deposits? Fixed Deposits are now considered to be a very old fashioned method of saving, but still attract many investors since they have guaranteed returns at the end of the tenure of the investment at a decent interest rate. There are various factors that affect the rates of interest for a Fixed Deposit. Policies of the Reserve Bank of India   - The several norms and restrictions posed by the Reserve Bank of India , in order to gain optimum control over credit and inflow and outflow of fund throughout the country. The repo rate changes, cash reserve ration tends to change and these changes affect the banking products like Fixed Deposits, loans etc. Recession   - When unemployment in a country crosses the benchmark set Recession hits, and slowly the country faces an economic slow movement, affecting the purchasing power of the people in the country, forcing the Reserve Bank of India to release more funds in the financial marke...

Myths about Exchange Traded Funds (ETFs)

1) ETFs Are Similar to Individual Stocks: Like MFs, ETF consist of an underlying portfolio of securities that's designed to follow a specific index or investment strategy. Hence, they are as diversified as various mutual funds. 2) ETFs Only Invest in Equity: Since they are listed on the exchange, the general belief is that ETF only consists of equity asset class. Globally, ETFs are available across asset classes – equity, debt, commodities, real estate and so on. In fact, over the past couple of years, India has also seen the emergence of Gold ETFs. 3) All ETFs Are Index Funds: ETF started as a fund which used to track indices and hence they were branded as index funds that are listed. However, ETFs have progressed rapidly and are no longer associated only with passive index funds. Globally, we have seen the launch of actively-managed ETFs. In India, also we recently saw the emer gence of fundamentally-weighted ETFs on Nifty, which busts the myth that ETFs are index funds and can...

REC Tax Free Bond Issue

Tax Saving Mutual Funds Online Current open Infra Bond Application form   Download REC Tax Free Bond Application Forms REC (Rural Electrification Corporation) is going to issue tax free bonds and the issue will open on March 6 2012 and will close on the 12th of March 2012 When you buy 80CCF infrastructure bonds, the amount you invest in those bonds get reduced from your taxable income but in these bonds that's not going to be the case. The interest on these bonds will be tax free and they are similar to the other tax free bonds like the HUDCO, NHAI and PFC issues. For the two of you interested in knowing this – these bonds are tax free under Section 10(15)(iv)(h) of the Income Tax Act. Now on to the issue itself and let's start with the high credit rating that the issue has got. The REC tax free bond issue has been given the highest rating by all issuers since the government owns the majority stake (66.8%) in REC, it has been consistently profit making,  this is a se...

Good Loan

Why Is It A Good Loan?: Loans against gold are cheaper and better than personal loans as the former are available at lower interest rates. In contrast, the interest rates on personal loans are not standardised and can vary from bank to bank. Also, a personal loan depends on a host of factors including, the borrower's salary, profession and the purpose for which the loan is being taken.      For instance, the interest rate on a personal loan of 5 lakh falls in a wide range of 15-30%. But loans against gold are available for as low as 11%. Secured borrowing such as a loan against gold, investments or property is cheaper because it is backed by some assets, which command a good value at any point of time. If the borrower defaults on the loan, the banks can liquidate the assets to settle the loan account.    Being a secured loan, the risk of default and credit losses is significantly lower in this loan compared to other forms of loan for personal use. Given the lower risk, gold loa...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now