IIFL Asset Management Ltd (IIFL AMC), has announced the launch of IIFL Capital Enhancer Fund – Series I scheme that aims to provide the benefits of equity upside with a hedge against the market downside. Structured as an Annual Interval scheme, its’ objective is to achieve long-term capital appreciation by investing in equity and equity-related securities with strategy of hedging the portfolio with Nifty 50 Put Option and other Equity derivatives, according to Amit Shah, CEO IIFL Asset Management Business.
He said the asset allocation scenario in India suggests that investors prefer fixed income over equity due to the perception that fixed income provides regular and stable returns alongside security of capital, and that equity infuses a sense of risk. However, investors discount the fact that though equities seem volatile in the short term, they create wealth in the long term, he said, adding that equity investment strategies focused on sectors like IT, Energy and Financials including preferred segments like private banks, NBCs and insurance.
“With India set to become the fifth most attractive market for investments, and optimism over global economic growth at a record level including being even higher in the case of India, IIFL AMC aims to create a niche in the industry by moving away from the conventional and offering a plethora of differentiated, innovative products across asset classes backed by strong holistic research filling a market gap. The Capital Enhancer Fund – Series 1 is another step towards providing solutions that help the investors to maximise profits and minimise risk,” he said here today.
“IIFL Asset Management understands investors’ sentiment towards equity risks and intends to address their concerns by offering them improved prospects. The IIFL Capital Enhancer Fund – Series 1 is tailored with an objective to limit the downside by investing in a ‘put option’ — thus providing the investor a hedge against a market correction. Our Studies have shown that 95% of portfolio returns in long term are derived from appropriate asset allocation and only 5% derived from product selection. IIFL Capital Enhancer Fund – Series 1 aims to offer comfort to long term investors to focus on appropriate asset allocation rather than being worried about short term volatility,” Shah said.
“With Rs 120 lakh crores lying idle in fixed incomes and lesser amounts in equity, portfolio should be tuned towards growth – which is equity. Today’s scenario is witnessing Indian investors highly skewed towards Fixed Income, but our scheme is the +Need-of-the-Hour+ in the market and also a concept that every investor should invest their money in. We want to push those investors — having lazy money and not getting good returns – by generating 10% to 12% post tax returns. The Risk-O-Meter for our product is moderate and we expect to garner around Rs 2.5 crores to Rs 3,000 crores in this scheme,” He told mediapersons.
The scheme will invest predominantly in large cap portfolio and hedge the portfolio with the Nifty 50 Put Option. This allows investors to invest in a theme that aims to ‘minimise the risk and maximise the upside.’ The scheme aims to generate alpha by limiting the downside with a potential to an uncapped upside. The Annual Interval feature allows investors an option to subscribe or exit during the specified transaction period every year.
Noting that India is in a very exciting phase where people are slowly identifying value in long-term investment and opening up to the risks involved as well, Prashasta Seth, CEO, IIFL Asset Management Limited and Fund Manager of the scheme, said: “The Capital Enhancer Fund – Series 1 is designed to suit the needs of our investors. Our latest offering specifically addresses investors’ apprehensions by aiming to reduce the risks involved. IIFL Asset Management has always been successful in creating a niche for itself in the industry by moving away from regular products. Our previous offering(s) under Alternative Investment Funds category i.e. IIFL Special Opportunities Fund focusing on Pre-IPO and IPO space, introduced in India for the first time, has garnered USD 1.1 billion (as on 31st December 2017) and has become one of the largest AIFs in the country.”
Seth said investors looking to improve capital gains and beginners contemplating their first market investments can invest in regular or direct plan(s) offered by the IIFL Capital Enhancer Fund – Series 1, with a minimum purchase amount of Rs 5,000.
