Publish Date:
Shriram Mutual Fund has launched Shriram Multi Sector Rotation Fund. It is an open-ended scheme investing in equity and related instruments following multi sector rotation theme.
Sectoral and thematic funds have gained immense popularity in the current market, as they offer investors targeted exposure to specific industries or trends driving economic growth. These funds allow investors to capitalize on structural changes, emerging opportunities, and sector-specific catalysts, such as government initiatives, technological advancements, or global demand shifts.
However, their performance is inherently linked to the cyclical nature of sectors, which can lead to periods of significant outperformance followed by downturns. This makes sectoral and thematic funds highly rewarding but also riskier compared to diversified equity funds.
Unlike traditional sectoral funds, which focus on a single industry, Shriram Multi Sector Rotation Fund dynamically allocates investments across multiple sectors based on prevailing market conditions and growth potential.
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Details of Shriram Multi Sector Rotation Fund:
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Investment Objective |
The investment objective of the scheme is to generate long-term capital appreciation by employing a quantamental approach of investing in equity and equity derivatives of specific sectors that are trending due to better earnings expectation. The allocation among sectors and stock selection will be decided by the in-house proprietary quantitative model and further augmented with fundamental analysis.
There is no assurance or guarantee that the investment objective of the Scheme will be achieved |
|
Category |
Index Fund |
|
Min. Investment |
Rs 500/- and in multiples of Re 1 thereafter. Additional purchase Rs 500/- and in multiples of Re 1 thereafter. |
Face Value |
Rs 10/- per unit |
|
Plans |
Regular
Direct |
Options |
Growth |
|
Entry Load |
NA |
Exit Load |
1% of the applicable NAV, if redeemed within 3 months from the date of allotment.
Nil if redeemed after 3 months from the date of allotment. |
|
Fund Manager |
Mr Deepak Ramaraju
Ms Gargi Bhattacharyya Banerjee |
Benchmark Index |
NIFTY 500 TRI |
|
Issue Opens: |
November 18, 2024 |
Issue Closes: |
December 02, 2024 |
(Source: Scheme Information Document)
What will be the investment strategy for Shriram Multi Sector Rotation Fund?
Shriram Multi Sector Rotation Fund will be a diversified equity fund, the focus will be to invest in the 3 to 6 trending sectors that are selected by the fund manager at all and any point of time of the fund based on the relative momentum of the sectors.
The sectors will be selected by the proprietary quantamental strategy. However, the sectors so selected will be vetted fundamentally by the fund manager based on macro-economic parameters (like current account deficit, fiscal deficit, GDP growth, interest rates, inflation), investment indicators (like earnings momentum, investment in capex, new projects cleared, government policies such as PLI schemes announced, duty/taxation changes etc.), sentiment (purchasing manager index, sales of various consumer discretionary products, automobiles etc.), prices (crude, metals, gas), freight rates etc. to understand the rationale
(Source: PPT - Shriram Multi Sector Rotation Fund)
Once the sectors are selected, stocks from each sector will be decided by the Enhanced Quantamental Investment (EQI) strategy with the fund manager taking the final decision on portfolio construction.
(Source: PPT - Shriram Multi Sector Rotation Fund)
The scheme endeavours to generate long-term capital appreciation through an actively managed portfolio having significant exposure in equities following the theme of multi-sector rotation with focus on the trending sectors. The Scheme may from time to time hold cash / cash equivalents for the purpose of derivative investments and for meeting liquidity requirements.
How will the scheme allocate its assets?
Under normal circumstances, Shriram Multi Sector Rotation Fund will hold an allocation of 80% to 100% in Equity and Equity-related Instruments following the multi sector rotation theme, 0% to 20% in Other equity and Equity-related Instruments and 0% to 20% in Money Market Instruments and Cash.
Should investments in Shriram Multi Sector Rotation Fund be considered?
Shriram Multi Sector Rotation Fund employs a sector rotation strategy, aiming to allocate assets across various sectors based on prevailing market trends. It seeks to maximize returns by capturing growth in sectors that are expected to perform well.
A dynamic approach to sector allocation allows the fund to adapt to changing market conditions. For example, if the technology sector is booming, the fund might increase its allocation to tech stocks, and shift to defensives (like FMCG or pharma) during downturns. Since the fund invests across multiple sectors, it offers inherent diversification, reducing the impact of poor performance in any one sector.
In a volatile market, sector rotation funds have the ability to outperform traditional equity funds, especially if the fund manager accurately anticipates sector trends. However, do note that, The dynamic nature of sector rotation introduces a higher level of market risk. Poor timing or misjudgement in sector allocation can significantly impact returns.
Frequent sector shifts can lead to increased short-term volatility, making it less suitable for conservative investors or those with low risk tolerance. Additionally, the persistent macroeconomic uncertainty may keep short-term market volatility high. The performance of the scheme might therefore be impacted by these variables, among others, and may affect negatively if these sectors move out of favour.
The Shriram Multi Sector Rotation Fund offers a unique investment approach that can deliver significant returns for investors who understand and are comfortable with its higher risk profile.