NFO of Reliance Capital Builder Fund – Series B a close ended equity fund with a tenure of 3 years from the date of allotment of units.
The NFO Opens on August 12, 2014 and Closes on August 26, 2014. Please find hereunder a brief outlook on markets and investment strategy for the product.
· India is in a nascent bull market. The recent budget proposals is likely to provide further impetus to an already strong equity market
· Medium to long term bull market construct is in place due to –
o Macroeconomic recovery after decade low growth already visible
o Decisive political mandate not seen in last 30 years
o Severe under investment in equities by local investors (Huge pent up demand)
· Valuation still favorable for long term wealth creation:
| | 2008 | 2014 |
| Sensex Levels | 20873 | 26087 |
| Markets At Life Time Highs……But |
| Earnings Per Share (EPS) | 833 | 1338 |
| Trailing P/E (Price To Earnings) | ~28x | ~18x |
| Forward P/E | ~24x | ~14x |
| Market Cap To GDP Ratio | 103% | ~70% |
Source: Bloomberg, RCAM estimates July 30, 2014
· Economic Recovery leads to higher earnings: There is high correlation between company earnings & GDP Growth and with GDP growth expected to revive strongly over the next few years Earnings of corporate should rebound. Thus Earnings recovery will be a key market driver in the next few years.
With a view to capture some of these opportunities, we are launching Reliance Capital Builder Fund - Series B. The Fund will attempt to identify High Growth companies which can generate significant earnings growth over the next 3 years. Such stocks offer potential both in terms of PE (Price Earnings) improvement and growth in EPS (Earnings per Share), leading to possible multiplication of the stock price and therefore, wealth creation for investors.
'Presenting: Reliance Capital Builder Fund - Series B'
Investment Strategy Investments focused on high growth companies which have the potential to generate significant Earnings growth across the following key themes:· Economic Recovery: o Urban recovery: Consumer discretionary themes like Auto, Retail, Media, Internet etco Industrial revival: Engineering, Capital Goods etc · New Businesses – beneficiaries of Govt actionso Defenceo Railways o PSU Capex· High Capability Companies available at Reasonable Valuations o Leaders in their segments currently ignored or underpricedo Long operating history o Low near term visibility - hence low expectationsInvestment Framework of the Fund
The Fund Endeavors to invest into companies with:
· High Growth potential which can generate superior earnings as compared to Sensex or Nifty
· High ROEs or rising ROEs
· High operating leverage
· Sustainable business characteristics with 10-20 year operational track record which are at an inflexion point to scale up
· Good quality managements with no fractured balance sheets
Fund Manager: Sailesh Bhan (Deputy CIO –Equities)
For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
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PrajnaCapital [at] Gmail [dot] Com
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