Name of new fund offer (NFO)
Sundaram BNP Paribas Select Thematic Funds PSU Opportunities
What is this about?
It is an equity diversified fund that aims to invest at least 65% of its assets in public sector units (PSUs). A thematic equity fund, it can also invest up to 35% of its assets in non-PSUs.
The government owns significant stakes in PSUs as of now. However, since the present ruling coalition is unlikely to stall the disinvestment process, it is expected that the government will eventually dilute its holdings in PSUs. Also, since most PSUs are monopolies or leaders in their fields, such as banking, oil and power, they are expected to demand good valuation once they open up.
Since it is a thematic fund, it would invest in only a particular set of companies. If the government postpones the disinvestment process, it can turn very volatile. At the same time, even a fragment of good news, with little or nil action, can lift it.
MONEY MATTERS TAKE
The PSU space will generate a lot of action in the coming four years and funds invested in this space will benefit. But if you’re a fresh investor in equities or just starting out, diversified or large-cap funds are a better idea. If you do find the PSU space exciting and wish to focus on a narrow theme, choose between this NFO and Religare PSU Equity Fund.