NEW DELHI : SAMCO, broker and distributor of mutual funds, has launched a mutual fund. According to Jimeet Modi, founder of SAMCO Mutual Fund, the fund’s USP will be active management, unlike “index hugging” that many actively managed funds follow. Modi pointed out the significant overlap between actively managed mutual funds and indices, resulting in their underperformance relative to indices after accounting for fees. Passive funds that simply replicate indices and charge lower fees have gained ground in recent years.
SAMCO’s programs will disclose their overlap with the indices on a daily basis, Modi said, via a metric called “active share.” The funds will also focus on companies subject to heavy stress testing, he added. These tests will be conducted against many parameters, including corporate governance, cash flow and balance sheet, which will only allow a small number of companies to be selected. This reduces portfolio volatility, Modi pointed out, with those companies falling less than the overall market on days when the market is falling the most. Only 15 of the 50 stocks in the Nifty 50 index are stress tested, according to a statement released by SAMCO Mutual Fund.
SAMCO Mutual Fund will first launch a flexi-cap fund within the next 90-120 days, Modi announced. She will invest part of her corpus in global equities. The fund house will follow this with an active global fund investing in foreign stocks and then a tax saving fund. According to Modi, debt mutual funds won’t be on the fund house’s horizon at least for the first few years. The fund house will aim for an expense ratio of 1.75 to 1.9% on its regular plans and around 1% on its direct plans. According to Modi, the mutual fund company will operate independently of SAMCO’s existing brokerage and mutual fund businesses, including RankMF, its mutual fund selection platform.
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