NFO update: Shriram Multi-Sector Rotation Fund, Samco Arbitrage Fund, Tata India Innovation Fund; check details before investment

Shriram Mutual Fund (MF) is set to launch a pioneering multi-sector rotation fund that will make strategic sectoral investments using a quantamental approach. This unique open-ended equity scheme will provide investors with the opportunity to benefit from sectoral growth while minimising exposure to underperforming sectors.

The fund’s performance will be measured against the Nifty 500 Index, and it will invest in 3-6 sectors expected to outperform in the short to long term. The fund will dynamically adjust its sector allocations by leveraging relative sector momentum and other factors. The selection process is driven by Shriram AMC’s proprietary Enhanced Quantamental Investment (EQI) framework, which combines quantitative sector analysis with fundamental insights.

The strategy evaluates important factors such as macroeconomic indicators, sentiment, and sector pricing to determine sector selections. The fund manager will adjust sector weights and execute sector rotations based on trend data signaling changes in performance. 

Kartik L Jain, MD & CEO of Shriram AMC, said the fund addresses a common challenge faced by investors who often miss the optimal time to exit sectors when trends reverse. “Shriram Multi-Sector Rotation Fund aims to help investors avoid ‘sector traps’ and benefit from timely rotation across trending sectors.  This strategy is also tax-efficient, as capital gains tax is not triggered on transactions managed within the fund."

Deepak Ramaraju, Senior Fund Manager at Shriram AMC, noted that the two-stage investment process—starting with sector selection and then stock selection—ensures the fund remains aligned with its objective.

“Our sector rotation and stock-picking approach is designed to generate sustainable alpha over the long term,” he explained.

Investors have the option to participate in Systematic Investment Plans (SIPs), top-ups, and Systematic Transfer Plans (STPs) with a minimum investment of Rs 500. SIPs can be scheduled on a weekly, fortnightly, monthly, or quarterly basis.

After building a substantial investment portfolio, investors can choose to start a Systematic Withdrawal Plan (SWP) at similar intervals to receive a regular income stream.

Furthermore, the fund offers tax efficiency by only taxing capital gains when funds are withdrawn. This differs from investing directly in sector-specific funds, where frequent rebalancing results in capital gains tax being incurred with each transaction.

The structure of the Multi-Sector Rotation Fund enables investors to take advantage of sectoral trends without facing additional tax implications.

Samco Arbitrage Fund

Samco Mutual Fund has floated the Samco Arbitrage Fund, an open-ended hybrid scheme focused on arbitrage, designed for investors in higher tax brackets as it qualifies as an equity-oriented fund for tax purposes. The fund is benchmarked against NIFTY 50 Arbitrage TRI.

Objective: The primary goal of this hybrid scheme is to achieve capital appreciation and generate income by predominantly seeking arbitrage opportunities in both the cash and derivative segments of the equity markets. Additionally, the scheme will explore arbitrage possibilities within the derivative segment, as well as invest in debt and money market instruments.

Minimum Subscription Amount: Investors can start with a minimum subscription amount of Rs 5,000 and increment in multiples of Rs 1 thereafter. The minimum additional purchase amount for the scheme is Rs 500, with increments in multiples of Rs 1.

Exit Load: Investors will incur a 0.25% exit load if the investment is redeemed or switched out within 7 days before the date of unit allotment. There will be no exit load thereafter.

NFO period: November 11 to November 21, 2024.

Continuous sale/repurchase: Not later than December 3.

Tata India Innovation Fund

The Tata India Innovation Fund is an open-ended equity scheme focused on innovation themes. The new fund offer (NFO) is currently open for subscription and will be ending on November 25. The scheme will then reopen for continuous sale and repurchase on December 5.

The primary investment objective of the scheme is to provide investors with opportunities for long-term capital appreciation by investing in equity and equity-related instruments of companies that aim to benefit from innovative strategies and themes.

The fund will focus on targeting companies that are driving transformative innovation through research & development and cutting-edge technologies such as machine learning, artificial intelligence, and digital transformation.

This thematic fund will be compared against the NIFTY 500 TRI benchmark and will be managed by Meeta Shetty and Kapil Malhotra. The minimum application amount for lumpsum investment in the scheme is Rs 5,000, with multiples of Re 1 thereafter. For SIP, the minimum amount is Rs 100, with multiples of Re 1 thereafter. 

“Two things matter in investing: identifying a company which will be around for the next 10 + years and its ability to make money over the next decade.  Having just one of them is not enough.  Among other things, what gives them right to win is innovation. Thats the one thing which helps survival and growth. This comes through incremental and break through innovation.  Innovation gives competitive advantage and ability to stay ahead. India is at the forefront of digital, manufacturing and services innovation leading to a great number of opportunities.  The fund aims to capture some of these opportunities in companies which aim to thrive and grow," said  Anand Vardarajan, Chief Business Officer at Tata Asset Management.