Edelweiss Multi Cap Fund
Opportunities come in all
shapes and sizesMarch 2019
Flexibility is important in investing
2
Whereas the reeds below flew with every breeze – Like the one who adapts flexible investing approach
The mighty Oak tree thought he was far stronger than the reeds below– Like a static investment strategy
Flexibility helps you in al storms
3
…but one day, when the storm came, reeds found the way to weather the most violent of the storm. On the other hand, the Static Oak tree was in the spot
of bother and was the first to fall pray for it.
In the face of uncertainty/Instability, it always makes sense to adapt a flexible approach. Multi-Cap approach provides similar flexibility in investing.
Multi-Caps offer flexibility to diversify
4
Exposure to 20 different sectors*
Capture relatively attractive opportunities
across Large, Mid & small-cap stocks
Diversified allocation across
Market-caps
Sector Diversification
*Sectors in Nifty 500 Index
Multi-caps return are better than large-caps
5
4.6
7%
%
11
.99
%
9.1
9%
7.6
1%
12
.68
%%
19
.87
%
13
.95
%
10
.97
%
7.3
7%
%
14
.61
%
10
.82
%
8.3
2%
3 YRS 5 YRS 7 YRS 10 YRS
Large Cap Midcap Multi-Cap
Performance (CAGR)
Source: NSE. The data is for the day ending at 28/3/2018. Large-cap – Nifty, Midcap – NSE Midcap100, MultiCap – NSE500. Above data is only for illustrating purposes. Please note that past performance may or may not sustain in future.
Multi-cap Returns are less volatile than Midcaps
6
12
.76
%
13
.78
%
14
.58
%
20
.44
%
15
.90
%
16
.21
%
16
.19
%
19
.55
%
15
.90
%
16
.21
%
16
.19
%
19
.55
%
3 YRS 5 YRS 7 YRS 10 YRS
Large Cap MidCap MultiCap
Annualised Standard Deviation
Source: NSE. The data is for the day ending at 30/4/2018. Large-cap – Nifty, Midcap – NSE Midcap100, MultiCap – NSE500. Above data is only for illustrating purposes. Please note that past performance may or may not sustain in future.
MULTI-CAPS TEND TO OUTPERFORM LARGE CAP INDEX IN BULL
MARKET AND CONTROL DOWNFALL MORE THAN MID AND SMALL
CAP IN BEAR MARKET.
Historically, Multi-Caps have displayed resilience
7
-18
%
50
%
-53
%
72
%
-16
%
10
%
28
%
-21
%
22
%
0%
64
%
-64
%
10
6%
-24
%
4%
42
%
-12
%
30
%
-22
%
55
%
-58
%
80
%
-19
%
9%
32
%
-19
%
25
%
D O T C O M B U B B L E
I N F R A S T R U C T U R E A N D G L O B A L L I Q U I D I L T Y
S U B - P R I M E C R I S E S
P O S T S U B - P R I M E C R I S E S P E A K
H I G H I N F L A T I O N A N D G R O W T H
S L O W D O W N
G L O B A L R A L L Y F O L L O W I N G U S
R E B O U N D
P O S T E U R O P E A N C R I S E S
C H I N E S E S L O W D O W N
G L O B A L L I Q U I D I T Y A N D
D O M E S T I C R E F O R M S
1 1 - F E B - 0 0 2 5 - A P R - 0 3 0 7 - J A N - 0 8 0 9 - M A R - 0 9 0 5 - N O V - 1 0 3 0 - J A N - 1 2 2 8 - J U N - 1 3 2 7 - F E B - 1 5 2 9 - F E B - 1 6
2 5 - A P R - 0 3 0 7 - J A N - 0 8 0 9 - M A R - 0 9 0 5 - N O V - 1 0 3 0 - J A N - 1 2 2 8 - J U N - 1 3 2 7 - F E B - 1 5 2 9 - F E B - 1 6 3 0 - A P R - 1 8
Large Cap MidCap Multi Cap
Source: NSE. Large-cap – Nifty, Midcap – NSE Midcap100, MultiCap – NSE500.
Balanced performance throughout the years..
8
Year Ended Large-Caps Mid-Caps Multi-Caps
2001 -16% -30% -23%
2002 3% 24% 10%
2003 72% 138% 98%
2004 11% 25% 18%
2005 36% 35% 36%
2006 40% 29% 34%
2007 55% 77% 63%
2008 -52% -59% -57%
2009 76% 99% 89%
2010 18% 19% 14%
2011 -25% -31% -27%
2012 28% 39% 32%
2013 7% -5% 4%
2014 31% 56% 38%
2015 -4% 6% -1%
2016 3% 7% 4%
2017 29% 47% 36%
Resilient than Midcaps during
bear market
Better than large-caps during bull
market
Source: Bloomberg
WE CREATED A MULTI -CAP PORTFOLIO THAT INVESTED IN A
40/30/30 PROPORTION IN NIFTY 50, NIFTY MIDCAP AND NIFTY
SMALL CAP INDEX RESPECTIVELY
Multi-caps offer better risk reward proposition
9
Particulars Large Cap Mid-capMulti-Cap Portfolio*
Index Returns 12.45% 15.59% 14.66%
Value of 1000 invested* 5,340 7,913 7,049
Annualised Standard Deviation 21.99 21.66 21.09
Sharpe Ratio 0.57 0.72 0.70
*Value of 1000 invested from 1/1/2004 – 31/3/2018
The returns provided were almost similar to Midcap stocks, But wait! Risk is lower than Large and Midcaps!
Source: NSE. The data is for the day ending at 28/3/2018. Large-cap – Nifty, Midcap – NSE Midcap100, MultiCap – NSE500. Above data is only for illustrating purposes. Please note that past performance may or may not sustain in future.
T H E I N V E ST M E N T O B J EC T I V E O F T H E S C H E M E I S TO G E N E R AT ELO N G - T E R M C A P I TA L A P P R EC I AT I O N F R O M A D I V E R S I F I E DP O RT F O L I O T H AT P R E D O M I N A N T LY I N V ES T S I N EQ U I T Y A N DEQ U I T Y - R E L AT E D S EC U R I T I E S O F C O M PA N I E S A C R O S S VA R I O U SM A R K E T C A P I TA L I Z AT I O N .
Investment Strategy
Identifying compounding businesses from the universe of large, mid and small cap stocks
No compromise on quality- higher degree of due diligence
Aim to benefit from both sources of return :
Compounding of earnings
Valuation re-rating
Edelweiss Multi-cap Fund
10
Scheme Information
Scheme Open Ended Scheme
Inception Date 3rd Feb 2015
Fund Manager Harshad Patwardhan
Benchmark Nifty 500 TR Index
Standard Deviation 14.78%
Beta 1.03
Data as on 28th Feb 2019
Portfolio Allocation Strategy
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Strategic Allocation
• Buy and hold kind of a Approach.•Compounding Business•Proven track record over long periods•Structural growth story with a high quality business & management.
Tactical
•Business in cyclical industry•Well Levered to the upturn
•Bought and sold depending on the phase of the cycle and valuations
Option
•Business offering potentially Large scale-up opportunity•Typically has a higher degree of risk.•Have a 1 or 0 kind of a payoff
Defensive
•It is a position that is more of a defensive posture•Protecting from any probable market downside
68.92%
18.51%
2.95%
9.61%
Data as on 28th Feb 2019
Portfolio Positioning
12
Fund Facts
Top 10 Holding (%) 41.35%
Net Equity 93.01%
Turn over Ratio (Only Equity) 0.86
Top 10 Active Bets
Stock % Holding
Aditya Birla Fashion and Retail Ltd. 1.57%
Praj Industries Ltd. 1.44%
GlaxoSmithKline Consumer Healthcare Ltd.
1.41%
Havells India Ltd. 1.40%
Axis Bank Ltd. 1.40%
RBL Bank Ltd. 1.32%
The Indian Hotels Company Ltd. 1.30%
Dabur India Ltd. 1.30%
AAVAS FINANCIERS LIMITED 1.28%
City Union Bank Ltd. 1.28%
Data as on 28th Feb 2019,. Active bets are stocks in which the fund is overweight compared to benchmark
Portfolio Characteristics
13
NIFTY 50 Portfolio
FY19E EPS growth (%) 14.7 23.9
FY20E EPS growth (%) 24.1 27.8
PEG (x) 0.9 0.9
FY19E ROE (%) 13.9 14.3
FY20E ROE (%) 14.5 16.1
PER FY19E (x) 20.7 28.4
PER FY20E (x) 16.7 22.2
Portfolio Quality Sector Allocation
SectorOver
weight %
SectorUnderweight
%
Consumer 4.73 Oil & Gas -6.22
Others * 3.30 Auto -4.89
Financials 1.92Metals/ Minerals -3.30
Source: Internal data. Data ending 28th Feb 2019. *Includes Chemicals, Fertilisers and Pesticides, Hotels, Papers, Retail, Textiles, Transportationetc. Portfolio quality is represented by Estimated Return on Equity. Return on equity (ROE) is the amount of net income returned as apercentage of shareholders equity. Return on equity measures companies profitability by revealing how much profit a company generates withthe money shareholders have invested. EPS is net profit divided by total number of outstanding shares. Valuation is represented by price-earnings ratio (P/E Ratio). It is the ratio for valuing a company that measures its current share price relative to its per-share earnings.
Performance
14
Period
Scheme - Regular PlanBenchmark (Nifty500 TR
Index)Additional Benchmark (Nifty
50 TR Index)
Returns*Value of Rs.
10000 Invested
Returns*Value of Rs.
10000 InvestedReturns*
Value of Rs. 10000 Invested
1 Year -3.98% 9,602 -2.08% 9,792 4.32% 10,432
3 Year 18.14% 16,489 16.88% 15,965 17.20% 16,099
5 Year NA NA NA NA NA NA
Since Inception -Regular Plan
7.91% 13,635 7.01% 13,175 6.64% 12,992
Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments.* CAGR Return.Different plans shall have different expense structure. The performance details provided herein are of Regular Plan of Edelweiss Multi-Cap Fund.Returns are for Growth Option only. Since Inception returns are calculated on Rs. 10/- invested at inception of the scheme. In case the start/end dateis non business day, the NAV of previous day is used for computation.Since the scheme is in existence for more than 3 year but less than 5 years hence performance data for 5 years and more is not provided.
Data Source: Ace MF, Data as on 28th Feb 2019 In case the start/end date is non business day, the NAV of previous day is used for computation. Pleaseclick on http://edelweissmf.com/Download/factsheet.aspx for performance of other funds managed by fund manager.
True-to-Label – Bill Board
15
Buy and Hold approach
Active Management
43% of the portfolio is away from the
benchmark.
Well Diversified
• 62 Stocks
• 20 Sectors
Large cap, 67.8%
Mid cap, 22.0%
Small cap, 10.1%
Data as on 28th Feb 2019
Investment Process
16
Independent
Stock position
Sizing the
bets
Risk
assessment
Resizing
the bets
Focused
portfolios
Understanding sources of returns
Focus on total sectoral active exposure &
diversification
Incorporating new
information & stock ideas
Selectivity, scrutiny, high conviction
Classification:Strategic | Tactical | Defensive | Option
Scoring:Business | Management | Growth | Valuations | Circumstances
Liquidity
Probabilistic approach
Expected return
Earnings progression | Valuation changes | Dividend
New Research
17
CIO, EQUITIES, EDELWEISS ASSET MANAGEMENT
Harshad Patwardhan
18
With education from IIT/IIM, CFA charter and 25 years of industry experience, meet our CIO Equities – Mr. Harshad Patwardhan.
Harshad was the CIO Equities at JPMorgan Asset Management for over a decade and continued as the CIO Equities of Edelweiss Asset Management after the schemes changed hands in the year 2016. He’s responsible for long only equity mutual funds at Edelweiss Asset Management Limited.When not occupied with work, he loves to swim or read about a wide range of topics. His resilience to come out of difficult times has been an inspiration to many.
He has worked for 12 years on the sell side with various MNC brokerage firms and has been a rated research analyst by several large & prominent FIIs. He believes that the first-hand experience of covering stocks/sectors and interacting with experienced fund managers has been extremely valuable for his investment management career.
Disclaimer
19
This document is intended Distributors Only.
This document is for information purposes and
private circulation only and is not an offer to sell
or a solicitation to buy any mutual fund units /
securities or to have business relations with
Sponsor/ AMC/ Trustee Company and its
associates or Edelweiss Mutual Fund. These
views alone are not sufficient and should not be
used for the development or implementation of
an investment strategy.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
All opinions, figures and estimates included in this document (unless as specified in the document) are as of this date andare subject to change without notice. It should not be construed as investment advice to any party. Neither Sponsor/ AMC/Trustee Company and its associates nor Edelweiss Mutual Fund or any person connected with it, accepts any liability arisingfrom the use of this information. Utmost care has been exercised while preparing the document, and Sponsor/ AMC/Trustee Company and its associates or Edelweiss Mutual Fund does not warrant the completeness or accuracy of theinformation and disclaims all liabilities, losses and damages arising out of the use of this information. The recipient of thismaterial should rely on their investigations and take their own professional advice. Investment decisions of the AMC maynot always be profitable.
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