Edelweiss Diversified Growth Equity Top 100 Fund - Plan B

3 Value Research
Change from previous, NAV as on Apr 27, 2015
Category: Equity: Large & Mid Cap
Assets: R 78 crore (As on Mar 31, 2015)
Expense: 2.86% (As on Sep 30, 2014)
Investment Objective

The scheme seeks to provide capital appreciation from a portfolio that is substantially constituted of equity and equity related securities of the 100 largest corporates by market capitalization listed in India. The scheme may invest in arbitrage opportunities between spot & futures prices of exchange trades equities.

Fund Managers
+ Ashish Sahay since Jun 2014
+ Kartik Soral since Apr 2015
As on May 15, 2014

Edelweiss Mutual Fund's only large and mid-cap fund is a bit of an outlier in our selection. Launched a little less than four years ago, it's not only the youngest but with assets of R22 crore, it's also the smallest. While Value Research has never considered size to be a factor in the desirability of a fund, a short history means that a fund has to stand out clearly to be part of our selection.

Since its launch, this fund has generated returns of 12.9 per cent p.a. It has outperformed the benchmark in three of its five years and the category in two. However, the cornerstone of its performance is its relative risk-adjusted returns, which reflect in its Value Research Star Rating. For the last one year, the fund has consistently stayed in the four to five star range, with the average rating being 4.5. Since the rating depends on the previous three to five (in this case, three) year's returns and risk, this reflects an excellent propensity to generate excellent returns while managing risk.

The fund's portfolio has evolved in the direction of reducing large cap bias. During 2011-12, an average of 74 per cent of assets were large cap. In 2013-14, this number was down to 65 per cent, which currently is 55 per cent. Unusually, there's no small cap exposure at all. Maintaining this kind of performance with this kind of capitalisation bias indicates excellent stock selection. In principle, we don't really like funds where the fund manager flits in and out of stocks. This fund is an extreme case with the average holding period being just 7.7 months. However, one can't argue with results-since the net result is good returns, so be it.

Sector-wise, there's not much deviation from the benchmark or peers. However, the fund has been lightening up on the sectors that come right behind, which are FMCG, energy and autos. This fund could be the start of something good and while short, the track record has enough proof already. It'll bear close watching but the fund deserves some allocation from the discerning investor.