Thursday April 26, 11:15 AM
JPMorgan India Equity Fund |
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By Personalfn.com
Summary
Type : Open-ended Equity: Diversified
Benchmark : BSE 200
Min. Investment : Rs 5,000
Face Value : Rs 10
Entry Load : 2.25%*
Exit Load : 1.00%**
Issue Opens : April 19, 2007
Issue Closes : May 18, 2007
* Entry load of 2.25% will be charged for investments less than Rs 50 m. Nil for investments above Rs 50 m.
** Exit load of 1.00% will be charged if redeemed within 6 months from the date of allotment of units.
Investment Objective*
The investment objective of the scheme is to generate income and long-term capital growth from a diversified portfolio of predominantly equity and equity-related securities including equity derivatives.
*Source: Offer document
Is this fund for you?
JPMorgan India Equity Fund (JPMIEF), the maiden offering from JPMorgan AMC (Asset Management Company), is an open-ended diversified equity fund. The fund proposes to generate long-term capital growth from a diversified portfolio of predominantly equity and equity-related securities by tapping opportunities in Indian market.
JPMIEF proposes to invest in stocks across market segments (large caps, mid caps, small caps) and sectors by pursuing the bottom-up approach, i.e. it will aim for a stock-specific investment strategy rather than a sector-specific strategy. Put simply, if a particular stock is doing well (or has the potential to do well), the fund will invest in it irrespective of the performance of the sector or market segment to which it belongs.
This is the opposite of the top-down investment approach wherein the fund manager takes a macro view on the economy, then selects the sectors that are likely to do well within the economic scenario and finally the companies that are likely to fare well within those sectors.
Although, JPMIEF has indicated that it will pursue the bottom-up investment approach, it has announced its intention to pursue certain themes/sectoral bets aggressively. So in all likelihood, the fund will pursue an investment approach that embraces the top-down and bottom-up investment styles.
The fund has indicated that it will not shy away from taking aggressive calls on investment opportunities, it believes strongly about. In other words, it will be aggressively managed and investors can expect to see a concentrated portfolio of stocks/sectors based on the fund manager's view.
Speaking of the fund manager, JPMIEF has indicated that the fund manager will play a role of relatively lower significance as the team (including analysts) will be responsible for the investment calls. In other words, the fund will have lower dependence on individuals, as the investment process will hold sway over the decision-making. This implies that if the fund manager were to quit the AMC, the fund's performance is unlikely to be impacted adversely.
JPMIEF is the maiden offering from JPMorgan Mutual Fund. The fund house has no previous experience in managing a mutual fund in India, although it has considerable experience in managing mutual funds across global markets.
We recommend that investors give the fund a miss and evaluate its performance over the long-term (at least 3 years) before taking a view on the fund. Till then, they should consider investing in existing well-established funds with a similar investment proposition; two such funds that are candidates for investment include HDFC Equity (39.02% CAGR over 3-Yr, 46.83% CAGR over 5-Yr) and DSP ML Opportunities (36.04% CAGR over 3-Yr, 47.22% CAGR over 5-Yr).
Portfolio Strategy
JPMIEF is mandated to invest at least 65% of its assets in equity and related securities. It can invest upto 35% in debt and money market instruments. Its allocation to derivatives (future and options) can go as high as 50% of assets.
| Instruments |
Allocation Range |
| Equity & equity related instruments |
65%-100% |
| Money market instruments |
0%-35% |
Fund Manager Profile
Mr. Harshad Patwardhan, Fund Manager, is B.Tech (IIT). He also holds a PGDM (IIM) and is a CFA. He has nearly 13 years experience in the stock markets. Prior to joining JPMorgan Asset Management he worked for 2 years with Deutsche Equities India Private Limited as a senior research analyst and has extensive experience with several foreign brokerage houses covering a variety of sectors.
Mr. Amit Gadgil, Fund Manager, is M.Com, Chartered Accountant and PGDM (IIM). He has nearly 5 years experience in the accounting and financial services sector. Prior to joining JPMorgan Asset Management, he worked for 7 months with Hansberger Global Investors and Deutsche Equities India Private Limited among other firms.
Outlook
JPMIEF is likely to be a high risk-high return investment proposition given its self-professed investment approach that involves taking aggressive investments calls. Put simply, this means that the fund could witness sharp swings (both on the upside and downside) based on its investment calls and stock market performance.
However, during a falling market, the fund can take 'shelter' in its debt allocation (upto 35% of net assets), which can reduce volatility considerably.
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