Thematic Mutual Funds sell when a theme is in fashion and often morph into hollow shells as the theme stops working. In this article, we look at a few major thematic funds that AMCs ‘killed’ in 2018
Aditya Birla India Reforms Fund
This fund was launched as far back as 2010. The 2010 stock market was a bullish one and the hope of economic reforms was a major driver of that market. The USP of the fund according to its Scheme Information Document was to invest in ‘companies expected to benefit from economic reforms, PSU disinvestment and increased government spending.’
The fund hasn’t performed badly, returning an 18.25% CAGR over the past five years. However, it simply hasn’t ‘sold’ much, amounting to just Rs 100 crore in AUM at present. Aditya Birla AMC is merging the fund with Aditya Birla Sun Life Infrastructure Fund which focuses on companies ‘participating in the growth and development of infrastructure in India’, thereby putting an end to the ‘India Reforms’ theme.
Axis Triple Advantage Fund
The idea behind this fund was that a portfolio investing equally in equity, debt and gold will find great favour among investors who want a spread across asset classes. It was also launched in 2010 when both equity and gold were doing very well. The scheme was mandated to invest 30-40% of its assets each in both equity and debt, and 20-30% in gold. In other words, there was almost an equal split.
However, gold took a steep dive after 2013 and the fund’s 5-year CAGR is just 9%. The AUM dwindled to just Rs 294 crore. The AMC has hence decided to kill the fund while keeping the outer shell intact. Axis Triple Advantage Fund will go from 30-40% in equity to 65% minimum in equity, 10-30% in debt and 10-30% in gold.
An Axis Mutual Fund spokesperson sent us the following response to the change in this fund. “The changes made were as a result of feedback obtained in the market from investors. With regard to Axis Triple Advantage Fund, exposure to the three asset classes has been maintained despite an increase in the equity allocation.”
ICICI Prudential Indo Asia Fund
This fund was launched in 2007 with the idea of giving investors exposure to domestic Indian companies and companies listed in other Asian countries such as Japan, China and South-East Asia. The fund currently allocates 12.35% of its assets to East Spring Asian Equity Fund Class (E) which is an international fund domiciled in Luxembourg investing in Asian Equities. East Spring has Tencent has its largest holding.
ICICI Prudential Indo Asia Fund returned a decent 10.66% since launch but lower than many purely domestic funds. It hasn’t had much luck with AUM, garnering just Rs 172 crore at present.
As part of the current SEBI categorization exercise, ICICI Prudential AMC has decided to change everything about the fund including its name. This fund will now be known as ICICI Prudential Small Cap Fund, with a mandate to invest 65% of its assets in domestic Indian small-cap companies. In an emailed response to our query about the change of mandate in the fund, the AMC indicated that the new scheme will still be free to invest in Asian stocks up to 0-30% of its assets. However, there is nothing in the new mandate to indicate such an intention.
Here is what the AMC said: “ICICI Prudential Indo Asia Equity Fund currently invests predominantly in India stock markets and a portion in Asian equities. Post the SEBI categorization, the Scheme would be categorised as Small Cap Fund with minimum exposure of 65%-100% in small-cap companies. However, the Scheme can invest 0-30% outside small-cap companies, as well.”