Chola Global fund's sector cap to be 20%

Chola Mutual Fund will cap the sector exposure in its Chola Global Advantage fund to about 20 per cent.

This implies that only five to seven companies from one sector will be chosen for investment by the company. The initial offer for subscription of the Chola Global Advantage Fund is from April 19 to May 16.

"Sector exposure will be capped at 20 per cent, meaning that one sector will have about five to seven companies, whose stocks we will invest in for the fund. Chola Global Advantage Fund will be a very diversified fund. Also, we are looking at more than half a dozen sectors for investment," said Tridib Pathak, chief investment officer, Cholamandalam AMC Ltd, who announced launching of Global Advantage Fund in Ahmedabad on Friday.

He said that the scheme offers both cumulative as well as dividend options and units will be offered at Rs 10 per unit plus the applicable load. The minimum application amount during the initial offer period is Rs 5,000.

Chola Mutual will look at investing in stocks of companies in the automobile, metals, FMCG and engineering sectors with for its Chola Global Advantage Fund.

"Five years ago, we would have only considered IT an pharma for this fund. However, Chola is not too keen on pharma stocks now. Some sectors that we would look at seriously will be auto, metals, FMCG and engineering," said Tridib Pathak, chief investment officer, Cholamandalam AMC Ltd.

Chola has shortlisted 30 to 35 companies from a list of 123 companies, which have placed a thrust on exports. The company has announced in its offer document that it will invest into diversified sectors and only in those companies, which are expanding their business in global markets and have or are expecting to source 20 per cent of their turnover from exports.

Pathak said that although Chola will pick companies having at least 20 per cent as exports, these companies will invariably be leaders in the domestic market and thus there is no question of ignoring the domestic market.

"Within the diversified mutual funds arena, there is a higher scope nowadays for further segmentation and Global Advantage Fund is yet another effort at segmentation," he said.

Besides, the investment strategy will be worked out on five factors namely, global competitiveness, strong business model, management quality, valuation and change in business management.