Here’s yet another equity fund that claims to have a small twist to it. The new fund, Religare Business Leaders, intends to invest in companies which have better margins, return-on-equity (RoE) and growth rate as compared to industry/segment average. The companies that finally get picked will also be among the top 5 in terms market share in industry/segment.
According to Religare’s pitch, such companies, by virtue of their better pricing power, superior cost structure, sustainable competitive advantage and better access to capital are expected to help build an all-season portfolio for the long term investors.
The fund can keep up to 20 per cent of its portfolio in fixed income instruments.
Fund Manager
Vetri Subramaniam, a commerce graduate and holder of PGDM from IIM (B), is the designated fund manager for the scheme. In his 14 years experience in Indian equity markets, he has worked with Kotak AMC (2001–2003) and various brokerages. He is also the fund manager for 7 existing equity schemes and an arbitrage fund of the fund house since December 2008.
Fund Family
Religare Mutual Fund came into existence after it took over Lotus Mutual Fund in 2008. Lotus India Tax Plan (now, Religare Tax Plan), which was launched in December 2008 became its first equity fund. Religare has been quiet aggressive in equity fund launches. Of its 10 existing equity funds, six are diversified equity funds, two sector fund and two equity linked savings schemes (ELSS). Of the Rs 10,031 crore of assets under management, equity funds account for a small portion of 6 per cent, its largest equity fund being Religare AGILE.
All its equity funds, being less than 3 years old, are unrated by Value Research.
Suitability and Recommendation
Clearly, the fund is likely to be a plain vanilla large-cap equity fund. In theory, the investment style the fund proposes to follow looks good. But being a new fund, it is yet to prove the effectiveness of its proposed investment style. Further, the fund house in itself is too young to be evaluated on the basis of the performance of its equity funds.
Two diversified equity funds, from other fund houses, with a similar mandate, UTI Leadership Equity and Sundaram BNP Paribas India Leadership have failed to impress with their performance and are rated 3-star by Value Research.
Investors looking to add a large-cap fund to their portfolio should, however, search among existing large-cap funds with a proven track record over the years.
Basic Details
Type: Open-End Equity Fund
NFO Opens: July 10, 2009
NFO Closes: July 31, 2009
Plan / Options: Growth and Dividend (reinvestment and payout) options.
Minimum Application Amount: Rs. 5,000/-
Minimum Additional Purchase / Redemption: Rs 1,000/-
SIP Facility: Available on monthly basis (min. Rs 1,000 x 6 cheques) and quarterly basis (min. Rs 1,500 x 4 cheques).
Benchmark: S&P CNX Nifty
Load Structure (During NFO): Entry Load: For investments of less than Rs 2 crore, 2.25 per cent; for investments of Rs 2 crore and more, but less than Rs 5 crore, 1.25 per cent. Exit Load: For investments of less than Rs 5 crore, 1 per cent for redemptions within 1 year.
Annual Recurring Expense (maximum): 2.50 per cent (including Investment Management fee of 1.25 per cent).
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