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New Funds Come Knocking - Fidelity India Value Fund
November 30, 2009

Fidelity India Value Fund NFO is now available on the Fundsupermart.com


Author : FSM Research Team



Untitled Document

Starting this November, Fundsupermart.com will be bring to retail investors New Fund Offers (NFOs). We would also share a note on the NFOs, aimed at keeping our investors abreast of the selection of new funds made available on our online transaction portal.

 

Fidelity India Value Fund is now available on Fundsupermart.com

The NFO is open from 16 November 2009 to 15 December 2009.

Fund Objective: To generate long-term capital appreciation from a diversified portfolio of predominantly equity and equity-related securities, in the Indian markets with higher focus on undervalued securities. The scheme could also additionally invest in foreign securities in international markets.

Indicative Asset Allocation:

  • Minimum 80% in Indian equity and equity-related securities.

  • Maximum 10% in foreign securities, including overseas ETFs (as permitted by SEBI/RBI).

  • Up to 20% in debt securities including securitised debt, money market instruments, cash and domestic ETFs (as specified by regulations from time to time).

Fund Managers:  Nitin Bajaj (for domestic investments) and Subramanian Balakrishnan (for investments in foreign securities)

Benchmark Index: BSE 200

Minimum Investment: Lump Sum: Rs. 5,000.

Risk Rating: 10 (The risk rating of 10 means that the fund is recommended for investors with ‘High Risk’ appetite)

To Buy, Click Here

Focus on undervalued shares

The fund uses value investing as its methodology for selecting stocks. Value investing generally involves purchasing a security which is currently underpriced relative to its intrinsic value. Intrinsic value is the ideal price of the security and can be above, below or equal to the current market price. The intrinsic value of an investment is calculated by analysing the various fundamental values from the balance sheet, profit and loss statement and the cash flow statement.  Investment gurus like Benjamin Graham and his famous student Warren Buffett follow the value style of investing.

Let us see an example for understanding this concept. Suppose a share is trading at Rs. 1000, which is lower than its intrinsic value of say Rs. 1500. The fund manager will invest with a belief that the price of the security will eventually go up to Rs. 1500 and the fund will get an absolute return of 50%  in the process.

Value investing is a high risk and high possible return investment technique. It is a high risk technique because, from the previous example, the markets may continue to price the security at Rs. 1000 or even less for a long period before the price goes up to Rs. 1500. There is a difference in getting 50% in a year and getting the same 50% return over a period of 3 years.

Up to 10% invested into foreign securities

There is an additional risk of currency fluctuations and the foreign investments may be further subjected to additional risks that are specific to the investment, the foreign markets and the economic conditions. 

Conclusion 

The fund is a good investment option for an investor with a high risk appetite. Most of the equity funds in India follow a growth style of investing. An investment into a value-based fund will assist in creating a style balanced* portfolio. In addition, since the fund invests up to 10% into foreign markets, from a portfolio perspective, the geographical risk of investing only in Indian equity market is reduced. One can consider an allocation of 10% -15% into a fund which adopts the value style of investing in the equity part of the portfolio.

To check out the gamut of funds on board, simply log on to our website, mouse over the 'Funds Info' option under the top menu or select 'Funds Search| Choose a fund' tab and click on the fund name.

For enquiries, call us at +91 22 4219 9494 or e-mail us at clienthelp.in@fundsupermart.com

At Fundsupermart.com, we constantly look to bringing our valued investors the finest selection of mutual funds!


iFAST and/or its content and research team’s licensed representatives may own or have positions in the mutual funds of any of the Asset Management Company mentioned or referred to in the article, and may from time to time add or dispose of, or be materially interested in any such. This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any mutual fund. No investment decision should be taken without first viewing a mutual fund's offer document/scheme additional information/scheme information document. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Investors should seek for professional investment, tax, and legal advice before making an investment or any other decision. Past performance and any forecast is not necessarily indicative of the future or likely performance of the mutual fund. The value of mutual funds and the income from them may fall as well as rise. Opinions expressed herein are subject to change without notice. Please read our disclaimer in the website.

 


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