![Mathematical illustration
Equal-Weight Portfolio A Portfolio B
Stock
Returns
Allocation Return Allocation Return Allocation Return
Stock 1 30% 20% 6.0% 5% 1.5% 35% 10.5%
Stock 2 20% 20% 4.0% 5% 1.0% 35% 7.0%
Stock 3 10% 20% 2.0% 20% 2.0% 20% 2.0%
Stock 4 -10% 20% -2.0% 35% -3.5% 5% -0.5%
Stock 5 -20% 20% -4.0% 35% -7.0% 5% -1.0%
Total 100% 6% 100% -6% 100% 18%
Better allocation to
winning stocks
materially changes the
portfolio performance
Key to success:
[a] Identify the winning stocks
[b] Allocate ample enough to make an impact
+
- -
3](https://image.slidesharecdn.com/fundpresentation-210317072206/85/IDFC-Focused-Equity-Fund-_Fund-presentation-3-320.jpg)
IDFC Focused Equity Fund _Fund presentation
- 1. IDFC Focused Equity Fund An open ended equity scheme investing in maximum 30 stocks with multi cap focus Right Stocks + Right Allocation Focused Strategy
- 2. What drives portfolio level return? One of the common mistakes in investing is to under-allocate to a winning investment idea Superior portfolio returns are driven by a combination of two factors: ❑Finding the right stocks for investment ❑Allocating sufficiently enough to contribute to overall returns Position sizing is one of the most important yet an over-looked aspect of portfolio construction process 2
- 3. Mathematical illustration Equal-Weight Portfolio A Portfolio B Stock Returns Allocation Return Allocation Return Allocation Return Stock 1 30% 20% 6.0% 5% 1.5% 35% 10.5% Stock 2 20% 20% 4.0% 5% 1.0% 35% 7.0% Stock 3 10% 20% 2.0% 20% 2.0% 20% 2.0% Stock 4 -10% 20% -2.0% 35% -3.5% 5% -0.5% Stock 5 -20% 20% -4.0% 35% -7.0% 5% -1.0% Total 100% 6% 100% -6% 100% 18% Better allocation to winning stocks materially changes the portfolio performance Key to success: [a] Identify the winning stocks [b] Allocate ample enough to make an impact + - - 3
- 4. Expected risk/return characteristics Risk Return Passive Traditional Passive Smart Active Diversified Active Concentrated High High Low Concentrated portfolios: ✓Meant for mature investors 4
- 5. Introducing IDFC FOCUSED EQUITY FUND
- 6. About the Fund 6 Concentrated multi-cap portfolio of a maximum of 30 stocks by design Flexibility to invest across market cap and across sectors Portfolio is a mix of Core and Tactical ideas Seeking to invest in companies with superior Quality and Growth characteristics Portfolio to reflect Fund Manager’s conviction, rather than a benchmark hug
- 7. Portfolio Approach Core Portfolio Tactical Portfolio High quality and Growth oriented businesses Turnaround opportunities
- 8. Investment Philosophy Growth Quality of Business Quality of Management Investing in scalable businesses that participates in a large opportunity size Visibility of growth is equally important Superior Return on Capital Employed (ROCE) Ability to generate healthy operating cash flow Low capital intensity Shareholder value creation & a strong corporate governance Efficient capital allocation 8
- 9. Portfolio Construct CORE PORTFOLIO High Growth High Quality High Growth Low Quality Low Growth High Quality ALPHA GENERATING IDEAS The ‘CORE’ comprises of companies with High Earnings Visibility & Proven Track Record. In addition, Alpha-generating, research driven ideas could originate from the other two segments. ALPHA GENERATING IDEAS 9
- 10. Stock Selection Philosophy High Growth Low Quality High Growth High Quality Low Growth Low Quality Low Growth High Quality Preferred space Quality Growth High High Low 10
- 11. Risk Management Keen eye for risk mitigation Force displacement by design – seeks to reflect only the best ideas in the portfolio Well – dispersed concentration Active and nimble portfolio management 11
- 12. 12 Truly Multi-cap investment approach Source : ICRA MFI Oct 2016 to Feb 2021 Calendar Year Large (%) Mid (%) Small (%) Debt (%) CY 2017 53 23 12 11 CY 2018 47 21 26 6 CY 2019 54 21 22 4 CY 2020 67 10 20 3 CY 2021* 68 12 19 0 Allocation to Market Cap Segment Source : ICRA MFI CY 2017 to CY 2021. Average of Large Cap, Mid Cap, Small Cap and Debt & others. *CY 2021 data is as on 28 Feb 2021 Market capitalization range from Jan 2018 is taken from the data published by AMFI. Data prior to Jan 2018 is calculated using ICRA MFI logic. 0 20 40 60 80 100 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Market Cap Exposure (%) Large Cap(%) Mid Cap(%) Small Cap(%) Debt (%)
- 13. 13 Fund Performance v/s Indices Source : ICRA MFI IDFC Focused Equity Fund – regular plan growth option has been considered. Underperformance /Outperformance is the difference between return of the fund and respective benchmark The fund is managed by Mr. Sumit Agrawal (w.e.f. 20th October 2016) 31 Oct 2016 to 28 Feb 2021; performance for total return index rebased to 100 Past performance may not be sustained in the future Particulars CAGR return (%) Absolute return (%) Underperformance/ Outperformance (%) IDFC Focused Equity Fund 12.4 65.5 Benchmark - S&P BSE 500 TRI 13.3 71.9 -6.4 Nifty 50 TRI 14.2 77.5 -12.0 Nifty Midcap 100 TRI 10.3 52.9 12.7 Nifty Smallcap 100 TRI 6.1 29.3 36.3 The fund has outperformed Mid & Small Cap index 50 80 110 140 170 200 Oct-16 Jan-17 Apr-17 Jun-17 Sep-17 Nov-17 Feb-18 Apr-18 Jul-18 Oct-18 Dec-18 Mar-19 May-19 Aug-19 Oct-19 Jan-20 Mar-20 Jun-20 Sep-20 Nov-20 Feb-21 Trend of IDFC Focused Equity Fund v/s Indices IDFC Focused Equity Fund S&P BSE 500 Nifty 50 Nifty Midcap 100 Nifty Smallcap 100
- 14. How is the Fund positioned currently? ❑ The fund is overweight in Commodities (Specialty Chemicals), Information Technology and Telecom sectors. ❑ The fund is underweight in Health Care, Consumer Discretionary and Staples and Utilities sectors and marginally underweight in Energy and Cement /Building Materials. Source : Bloomberg Data as on 28 Feb 2021 14
- 15. Fund Details Focused Fund – An open ended equity scheme investing in maximum 30 stocks with multi cap focus Fresh Purchase - Rs.5,000/- & any amount thereafter S&P BSE 500 TRI 1) If redeemed/switched out within 365 days from the date of allotment: a) Upto 10% of investment: Nil, b) For remaining investment: 1% 2) If redeemed / switched out after 365 days from date of allotment: Nil Nature Minimum Application Amount Benchmark Exit Load Mr. Sumit Agrawal Fund Manager* Rs. 1,437.71 Crores Month End AUM Data as on 28 Feb 2021 15 *Overseas investment will be managed by Mr. Viraj Kulkarni
- 16. Fund Performance Performance based on NAV as on 26/02/2021. Past performance may or may not be sustained in future. The performances given are of regular plan growth option. Regular and Direct Plans have different expense structure. Direct Plan shall have a lower expense ratio excluding distribution expenses, commission expenses etc. #Benchmark Returns. ##Alternate Benchmark Returns. $$ The strategy of the Fund has been changed from large cap to focused fund w.e.f. April 18, 2017. The fund is managed by Mr. Sumit Agrawal (w.e.f. 20th October 2016). Mr. Viraj Kulkarni is the dedicated fund manager for overseas investments of the scheme. Performance Table Scheme Name CAGR Return (%) Current Value of Investment of Rs.10,000 1 Year 3 Years 5 Years Since Inception March 16, 2006 1 Year 3 Years 5 Years Since Inception March 16, 2006 IDFC Focused Equity Fund$$ 21.71% 5.69% 15.74% 10.80% 12,165 11,805 20,761 46,360 S&P BSE 500 TRI# 34.42% 11.12% 17.54% 11.87% 13,431 13,717 22,425 53,535 Nifty 50 TRI## 31.37% 12.88% 17.29% 11.94% 13,127 14,378 22,189 54,055 16
- 17. Other Funds Managed by the Fund Manager Performance based on NAV as on 26/02/2021. Past performance may or may not be sustained in future. The performances given are of regular plan growth option. Regular and Direct Plans have different expense structure. Direct Plan shall have a lower expense ratio excluding distribution expenses, commission expenses etc. #Benchmark Returns. ##Alternate Benchmark Returns. §Current Index performance adjusted for the period from since inception to June 28, 2007 with the performance of S&P BSE 100 price return index (Benchmark). 2§The fund has been repositioned from an IPO fund to a large cap fund w.e.f. April 18, 2017 17
- 18. Product Label Disclaimer: The Disclosures of opinions/in house views/strategy incorporated herein is provided solely to enhance the transparency about the investment strategy / theme of the Scheme and should not be treated as endorsement of the views / opinions or as an investment advice. This document should not be construed as a research report or a recommendation to buy or sell any security. This document has been prepared on the basis of information, which is already available in publicly accessible media or developed through analysis of IDFC Mutual Fund. The information/ views / opinions provided is for informative purpose only and may have ceased to be current by the time it may reach the recipient, which should be taken into account before interpreting this document. The recipient should note and understand that the information provided above may not contain all the material aspects relevant for making an investment decision and the stocks may or may not continue to form part of the scheme’s portfolio in future. The decision of the Investment Manager may not always be profitable; as such decisions are based on the prevailing market conditions and the understanding of the Investment Manager. Actual market movements may vary from the anticipated trends. This information is subject to change without any prior notice. The Company reserves the right to make modifications and alterations to this statement as may be required from time to time. Neither IDFC Mutual Fund / IDFC AMC Trustee Co. Ltd./ IDFC Asset Management Co. Ltd nor IDFC, its Directors or representatives shall be liable for any damages whether direct or indirect, incidental, punitive special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. IDFC Focused Equity Fund (An open ended equity scheme investing in maximum 30 stocks with multi cap focus) 18 MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.