Edelweiss Focused Equity Fund – Should you invest in this NFO?
Edelweiss mutual funds has launched Focused Equity Fund New Fund Offer. This NFO would open for subscription on 12th July, 2022. This is a flexi-cap mutual fund scheme that invests up to 30 stocks across various market capitalizations i.e. largecap, midcap and smallcap. There are currently several focused equity mutual funds in India. These funds generated mixed performance of 8% to 15% annualized returns in the last 5 years. Should you invest in Edelweiss Focused Equity Fund NFO or avoid?
Edelweiss Focused Equity Fund NFO – Issue Details
Here are the issue details.
|Scheme reopens for continuous purchase/sale||05-Aug-22|
|Minimum Lumpsum||Rs 5,000|
|Minimum SIP||Rs 500 for 12 months|
|NAV of the fund||Rs 10 during NFO period|
|Exit Load||1% if redeemed within 365 days|
|Risk||Very High Risk|
|Benchmark||NIFTY 500 Total Return Index|
|Fund Manager||Mr. Trideep Bhattacharya
Co-Fund Manager: Mr. Abhishek Gupta
What is the investment objective of Edelweiss Focused Equity Fund?
The investment objective of the fund is to generate long term capital appreciation by investing in equity and equity related instruments of upto 30 companies across market capitalisation.
However, there is no assurance or guarantee that the investment objective of the Scheme will be achieved. The scheme does not assure or guarantee any returns.
What is the allocation pattern in this mutual fund scheme?
This fund investment pattern is as follows:
|Type of instruments||Min %||Max %||Risk Profile|
|Equity and Equity related instruments||65%||100%||High|
|Debt and Money Market Securities||0%||35%||Low to Medium|
|Units issued by REITs and InvITs||0%||10%||Medium to High|
Can NRI invest in this MF scheme?
Yes, they can invest in this scheme. They can invest on repatriation or non repatriation basis.
Why to invest in the Edelweiss Focused Equity Fund?
Here are a few reasons to invest in this fund. While flexicap invest in any number of stocks across market cap, focusssed funds invests up to 30 stocks only.
1) This fund is a flexi-cap / focused fund that invests across market cap i.e. large cap, midcap and small cap stocks that acts like a diversification.
2) This mutual fund invests maximum of 30 stocks which can help to focus on a limited number of stocks by the fund manager. Such strategy can help to maximize returns instead of large number where one can loose focus.
3) Focused funds category generated 8.5% to 15.5% annualized returns in the last 5 years.
Major risk factors you should consider before investing in such funds
Below are some of the risk factors in such funds.
1) The fund invests in mid-cap and small-cap stocks which are high risk. Currently we are already seeing this downfall in these 2 segments. Many midcap and smallcap stocks has fallen over 50% in the last 3 months.
2) This fund invests in debt segment where there is interest rate risk, credit risk, liquidity risk, reinvestment risk and concentration risk.
3) There is no guarantee that debt segment of this fund can generate returns. E.g. in the last 1 year during pandemic, debt funds generated 3% to 4% returns only.
4) This fund invests in REITs and InvITs which are high risk.
5) Investors need to refer scheme information document (SID) for complete risk factors.
How is the Performance of Focused Mutual Funds category?
Now, let us look at existing focused funds based on last 5 years returns. These funds generated 8.5% to 15.5% annualized returns in the last 5 years.
|Scheme Name||3 Yrs||5 Yrs|
|IIFL Focused Equity Fund||18.3%||15.7%|
|SBI Focused Equity Fund||14.9%||14.3%|
|ICICI Prudential Focused Equity Fund||16.9%||12.9%|
|Sundaram Focused Fund||15.8%||12.6%|
|Franklin India Focused Equity Fund||14.3%||12.4%|
|Axis Focused 25 Fund||11.2%||11.6%|
|Nippon India Focused Equity Fund||16.5%||11.5%|
|HDFC Focused 30 Fund||14.1%||9.8%|
|DSP Focus Fund||9.7%||8.7%|
|IDFC Focused Equity Fund||11.8%||8.6%|
Should you invest in Edelweiss focused Equity NFO?
Edelweiss Focused Equity Fund NFO invests in 30 stocks across various marketcap. Investing in such focused mutual fund is a good idea which can help like diversification within your portfolio.
However, one should note that new funds do not have past performance, hence difficult to say whether this fund would perform well in future or not. If you want to take risk and test such fund, you can invest now.
Alternatively, you can invest in some of the Focused Funds or Best Flexicap Mutual Funds that are already existing and proven the performance in the last 3-5 years.
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