Shriram Mutual Fund, which is part of the Shriram Group of companies (think Shriram Transport Finance and Shriram City Union Finance), has launched a new fund offer (NFO), Shriram Multicap Fund. The NFO was open from 7th September and closed on 21st September 2018. The fund will be open for purchase from October 8, 2018. This is Shriram AMC’s second-ever open-ended fund launch since Shriram Equity Hybrid Fund, which was launched 5 years ago in 2013.
In a media interview, Kartik Soral, the fund manager of the proposed Shriram Multicap Fund provided a few explanations for this. He said that the delay was on account of Shriram AMC’s policy of avoiding foreign partnerships for expansion and due to the untimely demise of the AMC’s former Chief Investment Officer (CIO) Partha Roy. However, he indicated the scenario was now changing and the AMC had more fund launches planned this year.
Shriram Hybrid Equity Fund, the AMC’s only other open-ended fund has an AUM (Assets under Management) of just Rs 55 crore. It has delivered 11.4% since inception in 2013. However, it has underperformed its benchmark (Nifty 50 TRI 70% and Crisil Composite Bond Index 30%) over the past three years and one year. The same fund manager, Kartik Soral also manages Shriram Equity Hybrid Fund.
|Performance||1 year||3 years|
|Shriram Hybrid Equity Fund||6.75%||9.19%|
Source: Value Research, Data as on 16/09/2018
Shriram Multicap Fund will be able to invest in companies across market capitalisation. It will be able to invest 65-100% of its assets in equities and 0-35% in debt. The fund’s strategy will involve applying a bottom-up filter to select stocks and then using a top-down approach to actually pick stocks. In the current scenario, the fund manager Kartik Soral is bullish on export-oriented companies rather than financials.
The fund offers growth and dividend options. The minimum application amount is Rs 5,000. The Nifty 500 will be the benchmark for this scheme.
Should you invest?
On a group level, Shriram Transport Finance and Shriram City Union Finance have been showing strong performance, and the group has an established position in financial services. However, as an AMC, Shriram Mutual Fund is extremely small and has remained so for the last five years. As a result, there is no strong past record to speak of. The AMC has indicated an expansion is in the offing but until it materialises, this cannot be taken into account. Shriram Equity Hybrid Fund, its only open-ended mutual fund, has underperformed in the last one and three years. On the positive side, a small fund can step into smaller companies without encountering the same liquidity problems that larger sized/established funds do.
Shriram Mutual Fund received approval from SEBI to operate the mutual fund in 1994 but did not launch a fund till 2013, when it launched its first fund.
The fund is managed by Shriram Asset Management Company Ltd (SAMC). Shriram Credit Company Ltd (SCCL), which holds 68.67% stake in SAMC, is the present sponsor of the fund. SCCL, a non-deposit taking non-banking financial company registered under RBI Act 1934, is the wholly owned subsidiary of Shriram Capital Ltd. The shares of SAMC are listed in the Bombay Stock Exchange.