{"id":737,"date":"2019-07-24T09:21:29","date_gmt":"2019-07-24T09:21:29","guid":{"rendered":"http:\/\/blog.certifiedfinancialguardian.com\/?p=737"},"modified":"2019-07-24T13:04:09","modified_gmt":"2019-07-24T13:04:09","slug":"is-union-focused-fund-a-worthwhile-bet","status":"publish","type":"post","link":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/2019\/07\/24\/is-union-focused-fund-a-worthwhile-bet\/","title":{"rendered":"Is Union Focused Fund A Worthwhile Bet?"},"content":{"rendered":"\n

Union Mutual Fund<\/a> launches Union Focused Fund (UFF), an open-ended diversified equity scheme<\/a> which will follow a focused approach of investing in equity and equity-related instruments.<\/p>\n\n\n\n

UFF aims to focus only on a maximum of 30 stocks of companies across market capitalization segments i.e. large-cap<\/a>, mid-cap<\/a>, and small-cap<\/a>. Therefore, in that sense, the fund has the flexibility as it follows a conviction-driven or a focused approach.<\/p>\n\n\n\n

As per SEBI regulations, a focused fund is not allowed to hold more than 30 stocks and invest a minimum of 65% of its assets in equity and equity-related instruments, which exactly what UFF is following. But it will also allocate some portion (up to 35% of its total assets) to debt and money market instruments from an asset allocation<\/a> standpoint and to mitigate the risk.<\/p>\n\n\n\n

On the risk-return matrix, UFF owing to its conviction driven or focused approach while investing in equities would be a very high-risk, very high-return investment proposition, although the fund holds the flexibility to invest across market capitalisation segments. <\/p>\n\n\n\n

[Read<\/strong>: Why Comparing Returns to Risk Is More Meaningful!<\/a>]<\/p>\n\n\n\n

Image 1: Risk-Return\nMatrix <\/em><\/strong><\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

(Source: Union Focused Fund Product Brochure-Presentation<\/a>)<\/p>\n\n\n\n

So, UFF is suitable for investors with a\nstomach for very high risk and an investment time horizon of at least 7-8 years\nwhile seeking capital appreciation. <\/p>\n\n\n\n

Table 1: Details of Union Focused Fund<\/em><\/strong><\/p>\n\n\n\n

\n Type<\/strong>\n <\/td>An open-ended equity scheme investing in maximum 30 stocks across market caps (i.e. Multi-Cap).<\/td>\n Category<\/strong>\n <\/td>\n Mid Cap Fund\n <\/td><\/tr>
\n Investment Objective<\/strong>\n <\/td>\n To generate capital appreciation by investing in a portfolio of select equity and equity-linked securities across market caps.

\n However, there can be no assurance that the investment objective of the scheme will be achieved.\n <\/td><\/tr>
\n Min. Investment<\/strong>\n <\/td>\n Rs 5,000 and in multiples of Re 1 thereafter\n <\/td>\n Face Value<\/strong>\n <\/td>\nRs 10 per unit\n <\/td><\/tr>
\n Plans <\/strong>\n <\/td>\n \u2022\tRegular\n\t
\n \u2022\tDirect\n <\/td>		\n Options<\/strong>\n <\/td>\n\t
  • Direct<\/li>\n\t
  • Dividend<\/li>\n\t\t
      \n\t\t
    • Re-investment Facility*<\/li>\n\t\t\t
    • Pay-out Facility<\/li>\n\t\t\t
    • Sweep Facility <\/li>\n\t\t<\/ul>\n\t\t*Default option<\/em>\n\t<\/ul>\n <\/td><\/tr>
\n Entry Load<\/strong>\n <\/td>\nNil\n <\/td>\n Exit Load<\/strong>\n <\/td>1% if units are redeemed or switched out on or before completion of 1 year from the date of allotment. Nil thereafter.\n <\/td><\/tr>
\n Fund Manager<\/strong>\n <\/td>\nMr Vinay Paharia\n <\/td>\n Benchmark Index<\/strong>\n <\/td>\n S&P BSE 500 Index$ (TRI).\n <\/td><\/tr>
\n Issue Opens<\/strong>\n <\/td>\n \n July 15, 2019\n <\/td>\n Issue Closes:<\/strong>\n <\/td>\n \n July 29, 2019\n <\/td><\/tr><\/tbody><\/table><\/center>\n\n\n\n

$Disclaimer: The “Index” viz. \u201cS&P BSE 500 Index\u201d, is a product of Asia Index Private Limited (AIPL), which is a joint venture of S&P Dow Jones Indices LLC or its affiliates (\u201cSPDJI\u201d) and BSE, and has been licensed for use by Union Asset Management Company Private Limited. Standard & Poor\u2019s\u00ae and S&P\u00ae are registered trademarks of Standard & Poor\u2019s Financial Services LLC (\u201cS&P\u201d); BSE\u00ae is a registered trademark of BSE Limited (\u201cBSE\u201d); and Dow Jones\u00ae is a registered trademark of Dow Jones Trademark Holdings LLC (\u201cDow Jones\u201d). \u00a9 Asia Index Private Limited 2014. All rights reserved. Redistribution, reproduction and\/or photocopying in whole or in part are prohibited without written permission of AIPL. For more information on any of AIPL\u2019s indices please visit http:\/\/www.asiaindex.com\/. None of AIPL, BSE, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and none of AIPL, BSE, S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC or their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein. <\/p>\n\n\n\n

(Source  : Scheme Information 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\u2019s asset allocation<\/a> will be as under:<\/p>\n\n\n\n

Table 2: UFF\u2019s Asset Allocation<\/em><\/strong><\/p>\n\n\n\n

\n \n \n \n \n
Instruments<\/strong><\/td>\n Indicative allocation (% of net Assets) <\/strong><\/td>\n Risk Profile<\/strong><\/td>\n <\/tr>\n
Minimum<\/strong><\/td>\n Maximum<\/strong><\/td>\n \n <\/tr>\n

Equity and Equity related instruments across <\/td>\n

65<\/td>\n 100<\/td>\n High<\/td>\n <\/tr>

Debt and Money Market Instruments<\/td>\n

0<\/td>\n 35<\/td>\n Low<\/td>\n <\/tr>\n<\/table><\/center>\n\n\n\n

*Investment in maximum 30 stocks across market\ncapitalisation.

\nInvestment in Securitized Debt \u2013 Nil

\nInvestments in Derivatives \u2013 up to 50% of the net assets of the scheme

\nInvestments in Securities Lending \u2013 up to 20% of its net assets of the scheme (where not more than 5% of the net assets of the scheme will be deployed in securities lending to any single counterparty).

\nIn accordance with SEBI Circular No. Cir\/ IMD\/ DF\/ 11\/ 2010 dated August 18, 2010, the cumulative gross exposure through equity, debt and derivative positions will not exceed 100% of the net assets of the scheme.

\nThe scheme does not intend to invest in overseas\/foreign securities or participate in repo\/ reverse repo transactions in corporate debt securities or engage in short selling or participate in credit default swap transactions.<\/p>\n\n\n\n

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

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

The Union\nFocused Fund seeks to generate long term capital appreciation by investing in\nmaximum 30 stocks across market caps (i.e. Multi-Cap). To manage the assets of\nthe Scheme, the fund manager and his team will follow an active strategy which\nwould be a combination of bottom-up and top-down approach. <\/p>\n\n\n\n

[Read<\/strong>: Two Approaches To Portfolio Construction Followed By Fund Managers<\/a>]<\/p>\n\n\n\n

The fund\nmanager\u2019s team will scan the market for opportunities and shall evaluate the\nindividual opportunities on their merits, leading to the bottom-up investment\ndecision. For the top-down approach, aspects such as macro-economic factors,\nindustry evaluation, market outlook, sector allocation etc. shall be\nconsidered.<\/p>\n\n\n\n

The fund\nmanager could use derivatives within the permissible limits for hedging and\nrebalancing the portfolio or such other purpose as may be permitted under the\nRegulations from time to time.<\/p>\n\n\n\n

Investment\nin Debt and Money Market Instruments will be as per asset allocation pattern\nmentioned in this document, subject to the investment limits prescribed under\nthe SEBI (Mutual Funds) Regulations, 1996 and circulars issued thereunder.\nInvestment in debt securities will be guided by credit quality, liquidity,\ninterest rates and their outlook.<\/p>\n\n\n\n

Who will manage the Union Focused Fund?<\/strong><\/p>\n\n\n\n

The Union Focused Fund is managed by Mr Vinay Paharia.<\/p>\n\n\n\n

Mr Vinay\nPaharia is a commerce\ngraduate and has done masters in management studies (MMS). He is currently the\nChief Investment Officer at the AMC and has over 15 years of work experience in\nEquity Research and Fund Management.<\/p>\n\n\n\n

Before joining\nUnion Mutual Fund, Mr Vinay Paharia was working with Invesco Asset Management\n(India) Private Ltd. as the Equity Fund Manager for more than a year.  Prior to it, he was associated with DBS\nCholamandalam AMC, K R Choksey Shares and Securities Pvt Ltd and First Global\nStockbroking Pvt Ltd as Equity Research Analyst.<\/p>\n\n\n\n

Some of the schemes, that Mr Vinay Paharia manages at the fund house are; Union Multi-Cap Fund (Formerly Union Equity Fund)<\/a>, Union Value Discovery Fund<\/a>, Union Small Cap Fund<\/a>, Union Equity Savings Fund<\/a>, Union Balanced Advantage Fund<\/a>, Union Capital Protection Oriented Fund \u2013 Series 7<\/a> and Union Capital Protection Oriented Fund \u2013 Series 8<\/a>.<\/p>\n\n\n\n

The outlook for Union Focused\nFund:<\/strong><\/p>\n\n\n\n

In order\nto achieve the investment objective, the fund manager of the Union Focused Fund\nwill invest across market cap using a combination of bottom-up and top-down\napproach through active management in 30 stocks. <\/p>\n\n\n\n

And to\nselect these 30 stocks from across universe having a market cap of more than a\ndefined threshold, a two-step process will be followed. The first step includes\na BMV (Business, Management and Valuation) filtering process to select stocks\nof companies that have reasonable and sustainable growth. <\/p>\n\n\n\n

Image 2: BMV\nfilter<\/em><\/strong><\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

(Source: Union Focused Fund Product Brochure-Presentation<\/a>)<\/p>\n\n\n\n

The\nsecond step includes stock segmentation process, wherein they are segregated into\ngrowth stocks and bargain stocks. It is followed by a focused approach to create\na portfolio with an objective to have a high potential return portfolio that\nwill invest across sector and market cap and allocate assets accordingly.<\/p>\n\n\n\n

[Read<\/strong>: Growth v\/s Value Investing: Which Is Better Of The Two In Current Times?<\/a>]<\/p>\n\n\n\n

Image 3: Stock\nSegmentation and Portfolio Construction<\/em><\/strong><\/p>\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

(Source: Union Focused Fund Product Brochure-Presentation<\/a>)<\/p>\n\n\n\n

However,\nin the current market environment, to construct a robust portfolio, that could\ngenerate higher returns is going to be a difficult task. Despite the current\ntimes of volatility, it does offer value buying opportunities in the small-cap\nand mid-cap segments due to market corrections. Even the large-cap segment\nwitnessed a downfall, but it comprises of large blue-chip companies with strong\nbalance sheets and proven track records. <\/p>\n\n\n\n

So, while constructing the\nportfolio with the aim of diversification, a dominant allocation to large-cap\ncan offer stability to the investment portfolio of the Union Focused Fund and\ncould help ride the wave of short-term volatility to a certain extent. <\/p>\n\n\n\n

But\namidst the turbulence owing to the macroeconomic headwinds in play, the fortune\nof the fund would be closely linked to a maximum of 30 stocks held in the\nportfolio (multi cap) managed by the fund manager to deal with the risk to achieve\nthe stated objective is crucial. <\/p>\n\n\n\n

[Read<\/strong>: Best Multi-Cap Funds That Could Prove To Be Wealth Multipliers In 2019!]<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Union Mutual Fund launches Union Focused Fund (UFF), an open-ended diversified equity scheme which will follow a focused approach of investing in equity and equity-related instruments. UFF aims to focus only on a maximum of 30 stocks of companies across market capitalization segments i.e. large-cap, mid-cap, and small-cap. Therefore, in that sense, the fund has…<\/p>\n","protected":false},"author":4,"featured_media":743,"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\/737"}],"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=737"}],"version-history":[{"count":4,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/737\/revisions"}],"predecessor-version":[{"id":746,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/737\/revisions\/746"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media\/743"}],"wp:attachment":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media?parent=737"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/categories?post=737"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/tags?post=737"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}