The new fund offer or NFO of the scheme will open for subscription on November 18 and will close on December 2. The scheme will reopen for continuous sale and repurchase on December 13.
This fund is the first of its kind in the industry. This new fund aims to give capital appreciation over the medium to long term in an actively managed equity portfolio that rotates across identifiable trending sectors that are performing well. The fund’s strategy is to leverage sector rotation to capture opportunities in outperforming sectors while reducing exposure to underperforming sectors, according to a release by the fund house.
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The scheme will be benchmarked against Nifty 500 TRI. The scheme will be managed by Deepak Ramaraju and Gargi Bhattacharyya Banerjee
The focus of the fund will be to invest in a minimum of 3 to 6 trending sectors, based on the relative momentum of the sectors, and exiting them when indications suggest a weakening trend. The sectors will be selected based on Shriram AMC’s proprietary Enhanced Quantamental Investment (EQI) framework, said the release.Once the sectors are selected in this top-down approach, stocks from each sector will be decided bottom-up by the EQI strategy, with the fund manager taking the final decision on portfolio construction and rebalancing. For the awareness of investors, the sectors that the Shriram Multi-Sector Rotation Fund will focus on at any given point in time will be published in the monthly fund fact sheet.“Feedback from advisors indicates that investors often get caught in ‘sector traps’ when they invest in upcoming sectors that are trending due to macroeconomic cycles or policy shifts. While their portfolio benefits from the uptrend, they usually remain invested even when the trend reverses or plateaus, due to inertia or behavioral biases. As a result of this, they may end up with lower or even negative annualised returns vs. if they had rotated their sector allocation on time,” said Kartik L Jain, MD and CEO, of Shriram Asset Management Company.
“Shriram Multi Sector Rotation Fund aims to address this investor pain point to help them avoid sector traps and instead, ride sector trends by rotating across sectors in a timely manner. Our catch line ‘Jaisa sector trend, waisa aapka portfolio’ captures this essence. This is also tax efficient for the investor as there is no capital gains tax implication when the fund manager rebalances across sectors within the scheme,” he added.
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Investors can regularly invest in this fund through Systematic Investment Plans (SIP), top-ups, or Systematic Transfer Plans (STP) from Shriram Overnight Fund to meet their financial and family goals. The minimum investment amount for lumpsum or SIP is Rs 500.
The fund offers the investor the benefit of Long Term Capital Gains tax (LTCG) @12.5% (plus surcharge and cess) if they cross Rs 1.25 lakh of capital gains in a fiscal year. If an investor redeems their investment in any sector fund to rebalance their sector allocation, they might face capital gains tax with each transaction. When the fund manager transacts within the scheme, there is no capital gains tax on the scheme. These two aspects make this fund a tax-efficient investment option for investors who are looking at exposure to trending sectors.
“Our two-tier approach of first doing a sector selection based on relative trends, and then doing stock selection, ensures that the fund remains true to label. Sector rotation and stock selection based on our proprietary Enhanced Quantamental Investment framework is also aimed at delivering sustainable alpha to our investors over time,” said Deepak Ramaraju, Sr Fund Manager, Shriram AMC.
