Edelweiss MF will launch its “Focused Equity Fund” on July 12

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Edelweiss Mutual Fund, a leading fund house, is cautiously optimistic about Indian equity markets over the next 3-4 months and unequivocally positive about its outlook over the next 2-3 years. Investors should use this volatility to enter markets rather than stay on the sidelines and remain confident in equities while investing in tranches in the current volatile markets, said its chief investment officer Trideep Bhattacharya.

This mutual fund house is launching a new fund—Edelweiss Focused Equity Fund—on July 12 to expand equities (long-only fund area). Equities (long-only funds) will be a priority area in the next few years, says Bhattacharya Activity area.

“We are well represented in debt, we are reasonably well represented in hybrids (there is still room to grow) and in equities (long only), we are underscale and that is where our next area of ​​focus,” he said.

Edelweiss Mutual Fund, which has assets under management of approximately ₹81,126 crore as of the end of March 31, 2022, is launching an equity fund after three years. The last time this fund house launched an equity fund was in February 2019 – a small cap equity fund.

Sharing the focused fund’s investment strategy, Bhattacharya said he would have a focused portfolio of 25-30 stocks with strong business models. It will have a benchmark and industry-neutral approach and a multi-cap portfolio. The targeted fund will be based on three themes: brands (buying established and emerging brands in the B2B and B2C segments); market share winners (buying market share leaders and emerging market share winners) and innovators (buying innovators, adapters and catalysts of change in business dynamics), he said declared. The weighting to be given to the three themes is not yet decided, he added.

“Our next step is to focus on long-only funds over the next five years. We are launching the Focused fund. The focus fund was a gap in our portfolio and that’s why we are doing it. This new fund will complement the equity offering basket. For investors looking at the long term, target investing is a good way to think – sub-themes are powerful wealth-creating areas,” he said.

When asked if now is the right time to launch an equity fund, Bhattacharya replied, “Now is the best time to launch an equity fund. You have to invest when there is famine outside and you have to take money from the table when there is a party. For a fund manager, there can be no better time to invest in stocks when I get stock prices at cheap valuations. It’s also good for the customers”.

Stock Market Outlook

Bhattacharya said the period from January 2022 to March 2023 should be seen as a two-part story. The first six months should be seen as an era of volatility, consolidation and correction and in July or September 2022 the majority of the bad news would be there – it may not be fully priced in, but it is there.

“Our advice to investors has been to invest in tranches rather than opting for a lump sum. The downside risk is reasonable this time. The next three to four months are volatile. Given the medium-term outlook, we don’t “We’re not suggesting people walk away from the market. We’re telling investors to take advantage of the volatility and gradually enter the market. We’re advocating buying on the downside for much of 2022,” he said. added.

Bhattacharya pointed out that India’s story is quite robust over the medium term and that future returns will be driven more by earnings expansion than multiple expansion. “It’s a regime change brought on by a change in interest rates. Multiple expansion would be hard to come by in the coming years.

Investment cycle

Bhattacharya also sees a surge in private investment over the next few years and has highlighted a real chance of an increase in the investment cycle in India in the coming days.

“For the past ten years, it was government investment and the private sector was absent. Private sector investment plans announced for the next three years are five to six times those of the public sector. Even if 50% of that happens, you would see a fair amount of capex in the field. Between now and the next election, the roadmap is reasonably clear where the top-down narrative is positive and the intent from the bottom is also there,” he added.

Published on

July 03, 2022

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