IDFC launches fund with two-day NFO

IDFC 'Equity Opportunity Series 1' opens on Tuesday 9 April, closes on Wednesday 10 April 2013

IDFC Mutual Fund has launched an equity fund which is open only for two days.

Interestingly, this comes even as equity mutual funds have seen outflows of Rs 13,445 crore on a year-to-date basis, as of February-end data from the Association of Mutual Funds in India.  

The IDFC ‘Equity Opportunity Series 1’ opens on Tuesday 9 April and closes on Wednesday 10 April 2013.

The idea is to limit the size of the fund to ensure that average holding in the company does not affect the price of the stock at purchase or exit, according to a press statement. The AMC is targeting less than Rs.200 crore in Assets Under Management, according to AMC officials.

The press statement added that the fund would be market capitalization agnostic. However, the portfolio in the initial stages would be in small companies by Market cap, it said.

“PAT (Profit After Tax) margins and ROEs(Return on Equity) of corporate India are at a decade low with small caps ratios being significantly lower. If there is a reversal in the Indian economy, smaller companies bounce back faster to generate higher ROEs and this impacts their valuations. The investment strategy of this fund is designed to benefit from the opportunity,” said the release.

The fund also has a provision to extend the NFO if the minimum amount is not raised.