Despite being in the slightly pessimistic range, consumer sentiment is showing some signs of improvement, suggesting a possible reversal in consumer mood
The equity fund management of Pramerica Mutual Fund does not have a sufficiently long track record. With over 80 similar schemes available in the market, investors would probably invest in schemes that have an established track record
Pramerica Mutual Fund is planning to launch an equity diversified scheme—Pramerica Diversified Equity Fund. According to the offer document recently filed with the Securities and Exchange Board of India (SEBI), the scheme would invest over 65% of its assets in equities across all capitalisations. The remaining part of the portfolio will be kept in cash and debt instruments. This multi-cap scheme would benchmark its performance to the S&P BSE 100 Index. There are over 80 multi-cap schemes available for investment, the new scheme from Pramerica Mutual Fund would just add to the list.
At present, Pramerica Mutual Fund has only two other equity schemes—Pramerica Equity Fund and Pramerica Dynamic Fund. Both these schemes have a track record of less than three years. Pramerica Equity invests over 60% of its portfolio in large-cap stocks. Pramerica Dynamic, as the name suggests, varies its equity allocation from 30%-100% depending on a proprietary model based on the markets. Both the schemes combined have a corpus of just over Rs100 crore. Over the past one year, Pramerica Equity and Pramerica Dynamic have delivered a return of 5.05% and 6.54%, respectively. The S&P BSE Sensex delivered a return of 8.39% in this period.
The schemes of this fund house do not have a sufficient track record to judge the performance of the fund management. Lack of a performance track record does not give investors a good reason to invest. This can be seen by the poor response to the existing equity mutual fund schemes of Pramerica MF. As this scheme does not provide anything different from other schemes, an investor would opt for a scheme which has a proven track record.
The fund managers would have to perform well to attract investors. This scheme would be managed by Brahmaprakash Singh who has over 18 years in investment management and Mahendra Jajoo who has over 20 years of experience in financial services and capital markets. The expense ratio of the scheme would have a maximum limit of 2.50% which could go up by an additional 30 basis points depending on the inflows beyond the top 15 cities.
Other scheme details:
Initial Purchase: Minimum of Rs5,000 and in multiples of Re1 thereafter.
Additional Purchase: Minimum of Rs500 and in multiples of Re1 thereafter.
• If units are redeemed/switched out after 395 days from the date of allotment – Nil.
Just last week, the Tamil Nadu Pollution Control Board ordered closure of Sterlite’s copper smelting plant at Tuticorin over alleged noxious gas leak. The apex court, however, refused to direct closure of the smelting unit and fined it Rs100 crore for polluting the environment