Edelweiss Maiden Opportunities Mutual Fund invests in IPOs – Should you invest?
Edelweiss Maiden Opportunities Mutual Fund – Should you invest?
Edelweiss has launched its new fund offer (NFO), Edelweiss Maiden Opportunities Mutual Fund – Series 1 that invests in IPO and related stocks. This is one of its kind in mutual fund industry that invests in IPO Stocks. This is creating some buz in mutual fund industry. Till now mutual fund schemes invested in existing stocks in India, however this unique scheme is expected to invest its funds in the IPO’s that keep coming to market. We could see IPO boom in 2017 and several IPOs gave more than 100% returns post listing. How good is Edelweiss Maiden Opportunities New Fund Offer? Should you invest in Edelweiss Maiden Opportunities Mutual Fund that invests in IPO’s which are relative higher risk compared to other funds?
Features of Edelweiss Maiden Opportunities Mutual Fund – Series-1
1) This new fund offer opens for subscription on 2nd February, 2018.
2) This NFO closes for subscription on 16th February, 2018.
3) This mutual fund scheme is 3 years closed ended scheme. Means, you cannot invest in this mutual fund scheme at later point of time once subscription is closed. This fund would get matured on 28th June, 2021.
4) Since this is close ended scheme, you cannot redeem the mutual fund units before 3 years, unless these are listed on stock exchange and there are buyers.
5) This funds objective is to invest in listed IPO companies and upcoming IPOs in India.
6) This fund would also categorises and invests in large cap stocks, midcap stocks and small cap stocks within its portfolio of IPO Stocks.
7) Fund also protects downside risk by investing in long dated put options.
8) Minimum amount of investment is Rs 5,000 and in multiples of Rs 10 there-of.
9) Since this is new fund offer, the NAV of the mutual fund scheme would be Rs 10 per unit.
10) There is no entry or exit load in this MF scheme.
11) Fund Managers are Bharat Lahoti and Bhavesh Jain.
What are the 3 aspects considered in this Edelweiss Maiden Opportunities Mutual Fund investment objective?
There are 3 aspects considered in this MF scheme:
1) This fund would work as dedicated invested vehicle by investing in newly Listed IPO companies in India.
2) This fund aims for right selection of IPO Stocks. Not all IPO stocks are good, hence this fund aims in choosing good IPO stocks for investing.
3) It would invest in a structured approach post listing gains as many of the IPOs listed gave higher returns if bought on listing day and holded for 12 months to 18 months period.
Also Read: Best BlueChip Stocks to invest in India now
What are the investment Objectives of Edelweiss Maiden Opportunities Mutual Fund?
While it is clear that it invests in IPOs stocks, here are the detailed investment objectives of this mutual fund offer.
1) This scheme would invest 65% to 100% in equity and equity related instrumnets including derivatives.
2) It invests upto 35% in debt related instruments.
3) This mutual fund also categorises and invests in large cap stocks, midcap stocks and smallcap stocks.
What are the mutual fund expenses estimated?
As per SEBI guidelines the mutual fund expenses should be less than 2.5% and this MF scheme is expected to be within the limit.
Can NRI invest in this new mutual fund scheme?
Yes, NRI’s / FIIs can invest in this mutual fund scheme with following conditions:
NRI’s can invest in this MF scheme on repatriation basis. Payments by NRIs/FIIs may be made by way of cheques drawn on non-resident external accounts payable at par and payable at the cities where the Investor Service Centers are located.
NRI’s can invest on Non-Repatriation basis. NRIs investing on a non repatriable basis may do so by issuing cheques drawn on Non-Resident Ordinary (NRO) account payable at the cities where the Investor Service Centers are located.
How IPO’s performed in the last 1 year in 2017?
There are approx. 36 main line IPOs that came for subscription in 2017. Lets analyse what is the issue price Vs Listing day price and listing day closing price Vs till today
a) Here is the performance on listing day if one would have got allotment from these IPOs.
1) There are 3 IPOs that gave between 114% to 152% on listing day which are Salasar Techno, Astron Paper and Avenue Supermart (Dmart).
2) There are 12 IPO Stocks which gave between 20% returns to 75% returns on listing day.
3) There are 11 IPO Stocks which gave between 1% to 20% returns on listing day.
4) Balance 10 IPO stocks gave negative returns between -1% to -16% on listing day.
If you observe, 70% of the IPO Stocks gave positive returns if one would have got allotment irrespective whether these are good or bad IPOs.
b) Here is the performance from listing day to till last weekend.
1) There are 3 IPO Stocks that gave between 150% to 200% if you have brought on listing day-1 closing time which Apex Frozen Foods, Shankara Building and PSP Projects.
2) There are 8 IPO Stocks that gave between 20% to 85% if you have brough on listing day-1 closing time.
3) There are 12 IPO Stocks that gave between 1% to 20% if you have brough on listing day-1 closing time.
4) Balance 13 IPO Stocks, one would have incurred losses between -1% to -36% if they would have brough on listing day-1 closing time. The worst IPOs include S Chand and CL Educate where it is over 30% loss if one would have brough on listing day.
If you observe, even if you have not received allotment of IPOs, if you have brought IPO Stocks on listing day-1 closing time, 60% of them have still gave good returns till date. Balance 40% have given negative returns.
What does company say about Edelweiss Maiden Opportunities Mutual Fund – Series-1?
Speaking on the launch and thought behind it, Ms Radhika Gupta, CEO, Edelweiss Asset Management said, "At Edelweiss AMC, the aim is to come up with truly innovative ideas that doesn't exist today and bridge the gap between what investors want and what the industry has to offer. This fund is first-of-its-kind in the industry that intends to follow a disciplined approach while investing in recent and upcoming listings. The aim is to make investing in such maiden ideas accessible and simpler for retail investors”.
Also Read: Top Rural Mutual Funds to invest in 2018
Edelweiss Maiden Opportunities Mutual Fund – Should you invest?
No doubt this is a unique mutual fund scheme that invests majorly in IPO Stocks (Pre or posting listing). There is no past performance of such IPO Stocks in terms of share price movements, hence difficult to guess whether such companies would provide listing gains or not. For listed companies, it is difficult to guess how their share prices would move as they totally dependent on investor sentiment along with company financial performance. Currently there are no existing mutual fund that invests in such investment strategy. However, investing in IPO’s could be high risk. This fund also invests for short term of 3 years in such high risk IPO Stocks. Hence this fund is for very very high risk investors only. If you are high risk taker and willing to block your money for 3 years, you can invest in this NFO, else you can invest in existing mutual fund schemes.
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Edelweiss Maiden Opportunities Mutual Fund invests in IPOs