{"id":241,"date":"2019-04-30T10:31:45","date_gmt":"2019-04-30T10:31:45","guid":{"rendered":"http:\/\/blog.certifiedfinancialguardian.com\/?p=241"},"modified":"2019-05-02T04:46:51","modified_gmt":"2019-05-02T04:46:51","slug":"can-iti-multicap-fund-multiply-investors-money","status":"publish","type":"post","link":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/2019\/04\/30\/can-iti-multicap-fund-multiply-investors-money\/","title":{"rendered":"Can ITI Multicap Fund Find A Place In Investors’ Portfolio?"},"content":{"rendered":"\n

ITI Mutual Fund is promoted by ITI Group, which is the promoter of the first private sector fund house Pioneer ITI Mutual Fund, that was taken over by Franklin Templeton Mutual Fund<\/a> in 2002.  ITI Group is a conservative, emerging and innovative financial services company which has interest in various financial services businesses. <\/p>\n\n\n\n

ITI Mutual Fund believes that most investors lack the requisite expertise for deciding allocation between different types of fund segments. Each of the individual segments work differently in the different market cycle. For an investor, it may be a difficult task to navigate through different market segments and exposures.<\/p>\n\n\n\n

Hence, the fund house launched Multi-cap\nfund as its first equity\noffering<\/a>, ITI Multicap Fund. It is an open-ended equity scheme that will\ninvest across large cap, mid cap, small cap stocks. <\/p>\n\n\n\n

What does a Multicap strategy mean?<\/strong><\/p>\n\n\n\n

Multi-Cap funds seek to invest across\nmarket capitalization segments from large cap to midcap to small caps. The fund\nmanager has complete flexibility to manage allocation between different\nsectors, market cap segments, styles etc. <\/p>\n\n\n\n

At present as per the SEBI guidelines the Large Cap, Mid Cap &\nSmall Cap companies are classified as below:<\/p>\n\n\n\n

  1. Large Cap: 1st -100th company\nin terms of full market capitalization.<\/li>
  2. Mid Cap: 101st -250th company\nin terms of full market capitalization.<\/li>
  3. Small Cap: 251st company\nonwards in terms of full market capitalization.<\/li><\/ol>\n\n\n\n

    In the absence of any restriction or limit on investment in any particular market cap, multi-cap funds enjoy the freedom to move from one market cap segment to another, based on the market sentiments and the conviction of the fund manager, with an aim to generate higher alpha for its investors. <\/p>\n\n\n\n

    ITI Mutual Fund will adopt a differentiated approach of portfolio construction that will be benchmark agonistic, while the investment universe will be divided into core stocks universe and tactical stocks universe. As mentioned by the fund house, under normal circumstances the fund will be at least 90% invested in equities. Its typical portfolio construction would include 35-40 stocks.<\/p>\n\n\n\n

    For the purpose of allocation between Large, Mid and Small Cap segments it will follow a unique internal research-driven process which is based on valuation, expected earnings growth, market and business cycles.<\/p>\n\n\n\n

    The fund would typically maintain a minimum 40% allocation towards Large Caps and can go up to 100% (during the initial deployment period, the fund will gradually build a portfolio towards the stated allocation) based on market conditions. Allocation<\/a> to large caps would provide stability to the portfolio with reasonable returns, whereas its exposure to Mid and Small Caps would be alpha accretive.<\/p>\n\n\n\n

    [Read<\/strong>: Why You Should Not Ignore Personalized Asset Allocation While Investing<\/a>]<\/p>\n\n\n\n

    Note that on the risk-return curve, a multi-cap fund fits in between large-cap funds<\/a> and mid-and small-cap<\/a> funds. So, do note that although multi-cap funds come with some safety element of large caps, they also carry the risk associated with mid<\/a> and small caps. Hence investors should consider investing in multi-cap funds only if their risk appetite permits, i.e. it is high, and if the investment time horizon is at least 5 years.<\/p>\n\n\n\n

    [Read<\/strong>: Best Multi-Cap Funds That Could Prove To Be Wealth Multipliers In 2019!<\/a>]<\/p>\n\n\n\n

    Table 1: NFO Details<\/em><\/strong><\/p>\n\n\n\n
    \n Type<\/strong>\n <\/td>\n An open-ended equity scheme investing across large cap, mid cap,\n small cap stocks.\n <\/td>\n Category<\/strong>\n <\/td>\n Multicap Fund\n <\/td><\/tr>
    \n Investment Objective<\/strong>\n <\/td>\n To generate long-term capital appreciation from a diversified\n portfolio that predominantly invests in equity and equity-related securities\n of companies across various market capitalisation. \n However, there can be no assurance that the investment objective\n of the Scheme will be realised.\n <\/td><\/tr>
    \n Min. Investment<\/strong>\n <\/td>\n Rs 1,000 and in multiples of Re 1 thereafter\n <\/td>\n Face Value\n <\/td>\n Rs 10 per unit\n <\/td><\/tr>
    \n Plans<\/strong>\n <\/td>\n \u2022 Regular

    \n \u2022 Direct\n <\/td>    		\n Options<\/strong>\n <\/td>\n \u2022 Growth*

    \n \u2022 Dividend (Pay-out and Reinvestment*)

    \n *Default option<\/em>\n <\/td><\/tr>
    \n Entry Load<\/strong>\n <\/td>\n Nil\n <\/td>\n Exit Load<\/strong>\n <\/td>\n \u2022 Within 12 (twelve) months\n from the date of allotment\u2013 1%.

    \u2022 Beyond 12 (twelve) months\n from the date of allotment \u2013 NIL\n \n <\/td><\/tr>
    \n Fund Manager<\/strong>\n <\/td>\n Mr George Heber Joseph and Mr Pradeep Gokhale\n <\/td>\n Benchmark Index<\/strong>\n <\/td>\n Nifty 500 Total Return Index\n <\/td><\/tr>
    \n Issue Opens:<\/strong>\n <\/td>\n April 25, 2019\n <\/td>\n Issue Closes:<\/strong>\n <\/td>\n May 09, 2019\n <\/td><\/tr><\/tbody><\/table>\n\n\n\n

    (Source: Scheme\nInformation Document<\/a>)<\/p>\n\n\n\n

    How will the scheme allocate its assets?<\/strong><\/p>\n\n\n\n

    Under normal circumstances, the scheme’s asset allocation<\/a> will be as under:<\/p>\n\n\n\n

    Table 2: ITIMF’s Asset\nAllocation<\/em><\/strong><\/p>\n\n\n\n
    \n Instruments<\/strong>\n <\/td>\n Indicative\n Allocation (% of Net Assets)<\/strong>\n <\/td>\n Risk Profile<\/strong>\n <\/td><\/tr>
    \n Equity and Equity related securities across market cap\n <\/td>\n 65\n <\/td>\n 100\n <\/td>\n Medium to High\n <\/td><\/tr>
    \n Debt & Money Market Instruments^\n <\/td>\n 0\n <\/td>\n 35\n <\/td>\n Low to Medium\n <\/td><\/tr><\/tbody><\/table>\n\n\n\n

    The scheme will invest across large cap, mid cap and small cap stocks. The Fund would adopt the list of Large Cap, Mid Cap, Small Cap companies prepared by AMFI for this purpose in accordance with the SEBI circular no. SEBI\/HO\/IMD\/DF3\/CIR\/P\/2017\/114 dated October 06, 2017 and SEBI\/HO\/IMD\/DF3\/CIR\/P\/2017\/126 dated December 04, 2017. If there is any updation in the list of large cap, mid cap, small cap companies, the fund manager would rebalance the portfolio (if required) in line with the updated list, within a period of one month.<\/p>\n\n\n\n

    At present the Large Cap,\nMid Cap & Small Cap companies are classified as below:<\/p>\n\n\n\n

    1. Large Cap: <\/strong>1st -100th company in terms of full market capitalization.<\/li>
    2. Mid Cap: <\/strong>101st -250th company in terms of full market capitalization.<\/li>
    3. Small Cap: <\/strong>251st company onwards in terms of full market capitalization.<\/li><\/ol>\n\n\n\n

      ^Money market instruments\ninclude Commercial Papers, Commercial Bills, Treasury Bills, Tri-Party Repo,\ngovernment securities having unexpired maturity up to one year, CMB, Tri-Party\nRepo, Certificate of Deposits, Usance Bills, Repo (with approved government\n& Corporate Debt Securities as collateral), and any other like securities\nas specified by the RBI from time to time.<\/p>\n\n\n\n

      (Source: Scheme\nInformation Document<\/a>)<\/p>\n\n\n\n

      What will be the Investment Strategy?<\/strong><\/p>\n\n\n\n

      ITI MultiCap Fund is a diversified equity fund that will invest predominantly in equity and equity related securities through allocation in companies across different market capitalisation, i.e. Large Cap, Mid Cap and Small Cap.<\/p>\n\n\n\n

      The investment approach will be primarily bottom-up stock picking –\nwhere investments will be selected primarily based on specific criteria\nrelevant to the company in question rather than general macroeconomic\nconsiderations. There will be no bias towards any market cap size or any\nsector.<\/p>\n\n\n\n

      The Scheme will always endeavour to remain fully invested in equity and equity related instruments. The fund has the flexibility to take exposure in various derivatives instruments – for the purpose of hedging, portfolio balancing and optimising returns.<\/p>\n\n\n\n

      Who will manage ITIMF?<\/strong><\/p>\n\n\n\n

      ITI MultiCap Fund will be co-managed by Mr George Heber Joseph and Mr Pradeep Gokhale.<\/p>\n\n\n\n

      Mr George Heber Joseph <\/strong>is the Chief Executive Officer (CEO) and Chief Investment Officer (CIO) at ITI Mutual Fund. He holds a bachelor\u2019s degree in English language & Literature (BA) and commerce (BCom). Mr George is also a qualified member of associate member of Chartered Accountants of India and an associate member of Cost and Management Accountants of India. He has over 16 years of work experience in Fund Management, Equity Research and Capital Markets.<\/p>\n\n\n\n

      Prior to joining, ITI Mutual Fund, he was working as a Senior Fund Manager (Vice President Grade & Key Management Personnel) at ICICI Prudential Asset Management Co. Ltd. handling two flagship funds. He was associated with the Fund Management Team of ICICI Prudential Asset Management Company Limited for nearly a decade tracking various sectors and a wide variety of stocks. During his tenure, he was also heading the Portfolio Management Services Division, was responsible to oversee fund managers activities, managing research analysts, performance measurement and work as a sounding board for fund managers. Before that, in his previous assignments, he has been associated with organisations like DSP Merrill Lynch Ltd, Wipro Ltd, MetLife India, Cholamandalam Investments & Finance Company Ltd and Tanfac Industries Ltd where he has handled fund management and corporate treasury responsibilities.<\/p>\n\n\n\n

      Mr Pradeep Gokhale<\/strong> joined ITI mutual fund as the Senior Fund Manager. He has a bachelor\u2019s degree in commerce (B. Com), is a Chartered Accountant, and CFA. He has a work experience of over 23 years in Fund Management, Equity Research, Credit Evaluation & ratings.<\/p>\n\n\n\n

      Before joining the fund house, he has been associated with the Fund\nManagement Team of Tata Asset Management for 14 years. Prior to joining Tata\nAsset Management, he was Head of Financial Sector and Securitisation Ratings at\nCARE Ratings Ltd. He has also worked in corporate finance departments of\ncompanies like Bombay Dyeing, Tata International and Lubrizol India Ltd.<\/p>\n\n\n\n

      The outlook of ITI\nMulticap Fund:<\/strong><\/p>\n\n\n\n

      ITI Multicap Fund will aim for long term capital appreciation from a diversified portfolio of stocks spread across market caps . To achieve its objective, the fund will follow an equity investment philosophy, (as given in the product brochure<\/a>), is represented by \u201cSQL\u201d focusing on three main pillars. <\/p>\n\n\n\n

      \u201cS\u201d: Margin of Safety,<\/p>\n\n\n\n

      \u201cQ\u201d: Quality of the business<\/p>\n\n\n\n

      \u201cL\u201d: Low Leverage.<\/p>\n\n\n\n

      The fund house states that \u201cthis \u201cSQL\u201d philosophy is aligned to our equity investment objective of \u2018Long Term Wealth Creation\u2019. This investment philosophy which we think would stand the test of times and follows from our overriding belief that “If we avoid the losers, the winners will take care of themselves.<\/em>” The fund will adopt a differentiated approach to construct the portfolio, that will be benchmark agnostic. Besides to manage the risk during bullish and bearish market scenarios it will follow a differentiated strategy and suitably align the portfolio.<\/p>\n\n\n\n

      The fund will follow the bottom-up approach of stock selection that will focus on investing in good and sound businesses which are well understood while constructing the portfolio. Given the asset allocation, the fortune of the Multicap fund will be closely hinged onto the performance of the stocks held in the portfolio. <\/p>\n\n\n\n

      Constructing the portfolio would be a challenging task for the fund managers in the present scenario. While the S&P BSE Sensex is already near its 52-week high, the earnings will have to justify the valuations. The trail P\/E of the S&P BSE Sensex and the large-cap index is currently at 28x and 26x. Even the P\/E of the S&P BSE MidCap index has scaled to around 30x. Calling any of these levels as ‘cheap’ would be an imprudent judgement. The S&P BSE SmallCap Index is trading at a negative P\/E of around 102x, but that doesn’t mean valuation-wise small-caps look attractive. What it means is, many constituents of the BSE SmallCap index are making losses thereby contributing negatively to its growth.<\/p>\n\n\n\n

      Hence, how the fund managers construct the portfolio is crucial and\nremains to be seen. As it will not be an easy year for wealth creation and\nvolatility will be obvious. <\/p>\n","protected":false},"excerpt":{"rendered":"

      ITI Mutual Fund is promoted by ITI Group, which is the promoter of the first private sector fund house Pioneer ITI Mutual Fund, that was taken over by Franklin Templeton Mutual Fund in 2002.  ITI Group is a conservative, emerging and innovative financial services company which has interest in various financial services businesses. ITI Mutual…<\/p>\n","protected":false},"author":4,"featured_media":242,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"cybocfi_hide_featured_image":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/241"}],"collection":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/comments?post=241"}],"version-history":[{"count":6,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/241\/revisions"}],"predecessor-version":[{"id":250,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/241\/revisions\/250"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media\/242"}],"wp:attachment":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media?parent=241"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/categories?post=241"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/tags?post=241"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}