BackSamco rolls out actively managed mutual fund
Jimeet Modi, founder, SAMCO Mutual Fund, said the funds of the firm will focus on heavily “stress tested” companies
PremiumNEW DELHI : SAMCO, a broker and mutual fund distributor, has launched a mutual fund. The USP of the fund will be active management, in contrast to ‘index hugging’ that many actively managed funds follow according to Jimeet Modi, founder, SAMCO Mutual Fund. Modi highlighted the large overlap that actively managed mutual funds have with indices, leading to their underperformance against indices after accounting for fees. Passive funds which simply replicate indices and charge lower fees have gained ground in recent years.
SAMCO schemes will disclose their overlap with indices on a daily basis, Modi said, through a metric called “active share". The funds will also focus on heavily “stress tested" companies, he added. These tests will be conducted along many parameters, including corporate governance, cash flow and balance sheet, leading to only a small number of companies making the cut. This reduces volatility of the portfolio, Modi emphasized with such companies falling less than the overall market on the days with the sharpest market falls. Only 15 out of the 50 stocks in the Nifty 50 index make the stress test cut, a release issued by SAMCO Mutual Fund said.
SAMCO Mutual Fund will first launch a flexi-cap fund within the next 90-120 days, Modi announced. It will invest a part of its corpus in global stocks. The fund house will follow this up with a global active fund investing in foreign stocks and then a tax-saver fund. According to Modi, debt mutual funds will not be on the horizon of the fund house at least for the initial few years. The fund house will be targeting an expense ratio of 1.75-1.9% on its regular plans and around 1% on its direct plans. According to Modi, the mutual fund house will function independently of SAMCO’s existing brokerage and mutual fund businesses, including RankMF, its mutual fund selection platform.
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