Edelweiss Focused Equity Fund NFO launched

Edelweiss Mutual Fund is coming out with a NFO in the form of Edelweiss Focused Equity Fund.

Edelweiss Focused Equity Fund would be a focused equity fund with no restriction to any caps.

The fund would be open for subscription from July 12, 2022 to July 25, 2022.

NFO details for Edelweiss Focused Equity Fund

Scheme Opens	12/07/2022
Scheme Closes	25/07/2022
Fund Manager	Mr. Trideep Bhattacharya Mr. Abhishek Gupta
Benchmark	Nifty 500 TRI
Minimum Investment	5,000
Fund Category	Flexi Cap
Exit Load	1% upto 365 days. NIL after 365 days.

Edelweiss Focused Equity Fund would be an open – ended equity fund with freedom to invest across large, mid and small cap stocks with no restriction with respect to caps but in a maximum of 30 stocks.

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Edelweiss Focused Equity Fund Investment Objectives

The investment objective of the fund is to generate long term capital appreciation by investing in equity & equity related instruments of upto 30 companies across market capitalization.

There is no guarantee that the investment objectives of the scheme would be achieved.

Edelweiss Focused Equity Fund Allocation

The asset allocation for the fund would be something like this

Asset Class	Minimum %	Maximum%
Equity and Equity Related instruments	65	100
Debt and money market instruments	0	35
Units issues by REITS and InvITs	0	10

The above figures are only indicative and not fixed, the fund managers have the liberty to move across the asset classes depending upon prevailing market conditions as long as they remain within the mandate permitted.

The fund can also invest in REITs and InvITs if so desired.

What is a NFO?

A nfo means a new fund from a mutual fund house which was not available earlier.

With growing acceptance of mutual funds as a form of investment, mutual fund houses periodically introduce new fund offers so as to complete their basket of investments available for investors.

A NFO is usually what results in the beginning of a mutual fund scheme.

Other reasons being merger of schemes within the same fund house or merger or acquisition of two or more fund houses, these are rare instances though.

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How does a NFO work?

A nfo or a new fund offer is a method by which a mutual fund scheme raises the initial investment into the fund.

The new fund offer is available for purchase for a limited number of days only.

After which it becomes unavailable for fresh purchase or redemption for a couple of days.

Once this time duration is complete, the nfo no more remains a nfo and is treated like any other open ended mutual fund scheme.

In which you can invest and redeem as and when you please, considering it is an open ended fund and you comply with the necessary exit load calculations.

Features of Edelweiss Focused Equity fund

Edelweiss Focused Equity Fund will have a focused equity portfolio of 25 to 30 stocks.

The fund will adopt a benchmark and sector agnostic approach.

It will have a multi cap approach to portfolio construction.

Investment strategy of Edelweiss Focused Equity Fund

Edelweiss Focused Equity Fund will look for established brands as well as emerging brands.

This strategy will therefore attempt to capture both the market leaders as well as the emerging market leaders.

It will strive to look out for businesses seen as market disruptors and enablers of new business models.

Risks with the strategy of Edelweiss Focused Equity Fund

Since Edelweiss focused equity fund will be a benchmark agnostic fund, it is very much possible for the fund to underperform the benchmark in the short run.

Focused funds inherently are prone to concentration risks.

Therefore they can be more volatile than diversified funds.

What are Focused mutual funds?

Focused mutual funds have a concentrated portfolio and do not invest in more than 30 stocks.

There are less diversified than flexi cap mutual funds but also have more potential for higher returns.

Despite the limitation of 30 stocks, certain focused mutual funds invest in even fewer stocks than that.

Invesco Focused fund invests in only 20 stocks whereas Axis Focused fund invests in only 25 stocks.

Funds besides focused funds also at times apply this investment strategy even though there are under no obligation to.

These include the following but not limited to these:

Axis Flexi cap fund

Axis Bluechip fund

Parag Parikh flexi cap fund

Parag Parikh tax saver fund

Should you invest in a nfo?

You can consider it if:

The new fund offer is a category of fund that is not existent in your mutual fund portfolio.

If it is going to be a part of your satellite portfolio.

If it adds a unique touch to your mutual fund portfolio.

If you understand the functioning, objectives and risks attached with the new fund offer.

The nfo mutual fund is aligned with your risk profile.

You should avoid it if:

The new fund offer is not going to add anything of unique significance to your mutual fund portfolio.

If the nfo is going to be a part of your core portfolio.

If the only reason you are investing is due to FOMO (Fear of missing out).

If you do not understand the investment style and risks attached with the nfo.

The nfo mutual fund is not aligned with your risk profile.

For portfolio enquiries, email us with your doubts at info@themutualfundguide.com

Disclaimer : While due precaution has been undertaken in the preparation of this article, The Mutual Fund Guide or any of its authors will not be held liable for any investments based on the above article. The above article should not be considered financial advice and has been published only for your perusal. Due credit has been given in case wherever required, in case you feel any part violates any rights then do get in touch with us and we shall get it duly removed.

Mutual Fund investments are subject to market risks. Please read the offer document carefully before investing