ITI Mutual Fund launched Focused Equity Fund NFO.This NFO will start his subscription on the 29thth May 2023. This is a flexicap mutual fund scheme that invests in up to 30 stocks across various market caps including large, mid and small caps. There are currently several stock mutual funds in India with a focus. These funds have produced variable performance from 9% to 15% annualized over the past five years. This article explores the details of the ITI Focus Equity Fund, exploring its NFO (New Fund Offer) date, investment strategy, strengths, weaknesses, and final insight.
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ITI Focus Equity Fund NFO – Issue Details
Here are the details of the problem:
| NFO period | From May 29, 2023 to June 12, 2023 |
| Schemes for continuous purchases/sales are reopened | Within 5 business days |
| Minimum application amount | 5000 rupees, thereafter in multiples of 1 rupee |
| Minimum SIP | Multiples of ₹1/- from Rs 500 |
| NAV of the fund | 10 rupees during NFO period |
| entry road | Nothing |
| end of load | 1% on redemption within 360 days |
| dangerous | very high risk |
| standard | nifty 500 try |
| fund manager | Dimant Shah Rohan Korde |
What is the investment objective of the ITI Focus Equity Fund?
The investment objective of the scheme is to enhance long-term capital value by investing in a concentrated portfolio of stocks and equity-related products of up to 30 companies across market capitalization.
However, there is no guarantee that the investment objective of this plan will be achieved. This system does not guarantee returns.
What is the allocation pattern for this mutual fund scheme?
The investment pattern of this fund is as follows:
Investing in the ITI Focused Fund, a new fund proposal focused on a focused portfolio of equities and equity-related products, has its own advantages and disadvantages.
ITI Focus Equity Fund NFO – Why Invest?
Priority Portfolio: The ITI Focused Fund focuses investments in a limited number of companies (up to 30) across various market caps. This approach allows fund managers to dissect and select potentially high-performing stocks, which may lead to better returns if the selected companies perform well.
Higher Earning Potential: With a focused portfolio, the ITI Focused Fund can yield higher returns if the selected stocks perform exceptionally well. This could be beneficial for investors seeking higher growth and willing to take more risk.
Market cap allocation flexibility: The fund has the flexibility to invest in different market caps including large, mid and small caps. This allows fund managers to adjust their portfolios based on market conditions and take advantage of opportunities across different segments of the market.
ITI Concentrated Equity Fund NFO Risk Factors
Higher Risk: Concentrated portfolios inherently carry higher risks compared to diversified portfolios. Investing in a limited number of companies exposes investors to individual stock volatility and potential underperformance. If any of the selected stocks perform poorly, it can have a significant impact on the fund’s overall return.
Lack of diversification: Because the fund focuses on a limited number of companies, it may lack the diversification benefits that come with investing in a wider range of stocks. Diversification reduces risk by spreading investments across different sectors, industries and geographies.
Market timing and stock selection risk: The performance of ITI focus funds is highly dependent on the fund manager’s ability to time the market and select the right stocks. Poor market timing or wrong stock selection can result in poor performance relative to benchmark indices and other funds in the same category.
Volatility Potential: Concentrated funds tend to be more volatile than more diversified funds. Changes in market sentiment or adverse events affecting a particular company can have a material impact on the Fund’s returns.
Limited achievements: The new fund offering, the ITI Focused Fund, may not have an extensive track record to assess performance and consistency over various market cycles. This lack of historical data can make it difficult for investors to assess the long-term potential of the fund. 5) Investors should refer to the Scheme Information Document (SID) for complete risk factors.
Concentrated mutual fund category performance
Now let’s look at the performance of existing concentration funds. These funds have generated annualized returns of 9% to 15% over the past five years.
| scheme name | 3 years | 5 years | 10 years |
|---|---|---|---|
| Japan India Concentrated Equity Fund | 34% | 13% | 19% |
| Franklin India Concentrated Equity Fund | 33% | 15% | 19% |
| Quant focused fund | 29% | 14% | 18% |
| SBI Concentrated Equity Fund | 26% | 13% | 16% |
| Sundaram Concentration Fund | 27% | 14% | 15% |
| HDFC Focus 30 Fund | 38% | 14% | 15% |
| Aditya Birla Sun Life Focused Equity Fund | twenty five% | 12% | 15% |
| ICICI Prudential Focus Equity Fund | 28% | 15% | 15% |
| Motilal Oswal Focus Fund | twenty one% | 11% | 14% |
| JM concentration fund | twenty five% | 9% | 14% |
| Axis Focused 25 Fund | 19% | 9% | 14% |
| DSP Focus Fund | twenty three% | Ten% | 14% |
| Bandhan Focused Equity Fund | twenty four% | 9% | 12% |
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Should I invest in an ITI-focused equity NFO?
Investing in the ITI Focused Fund, a new fund offering with a focused portfolio of up to 30 companies across market capitalization, has its own advantages and disadvantages.
On the positive side, the fund’s focused portfolio allows for in-depth analysis and the potential for high returns if selected stocks perform well. The fund has the flexibility to allocate investments across different market caps. Funds in this category have generated annualized returns of 14% to 19% over the past decade.
However, a concentrated approach poses increased risk and a lack of diversification, which can lead to fund volatility and potential underperformance if market timing or stock selection is wrong.
High risk investors can invest in such funds. Alternatively, investors can look for the best flexicap mutual funds that can generate higher returns with similar risk over the medium to long term.
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