This is an interesting NFO.
This fund will be managed by PPFAS AMC, which is promoted by PPFAS Ltd.
For those who don't know, PPFAS is acronym for Parag Parikh Financial Advisory Services.
PPFAS Ltd. claims to be one of India's earliest SEBI Registered Portfolio Management Service (PMS) providers.
According to this article, they are currently managing Rs 350 crore, which is a significant amount.
PPFAS Mutual Fund: Media: I'll change the rules of the game in the mutual fund industry: Parag Parikh
We have Rs 350 crore assets under management in PMS.
PPFAS AMC claims that its mutual fund will be different from others mutual funds in the market.
Here are some of ways in which the AMC claims it will be different:
1. First and foremost, PPFAS AMC will be launching just one equity mutual fund scheme
- "PPFAS Long Term Value Fund
". The idea is to avoid creating any confusion in the minds of the investors.
This may be the first as well as the last NFO from this AMC.
- The fund's investment decisions will be based only on fundamental analysis.
Technical analysis and other methods will have no role to play.
- The AMC will not have a sales team
, but will have a "small team of relationship managers".
(Nowadays there isn't much of a difference between the two. The relationship managers at most of the financial firms are nothing more than sales people).
- The AMC will not offer any upfront commission
to distributors. A trail commission of 50 basis points will be offered.
- The management of the AMC and the fund and the employees of the two will be encouraged to invest in the mutual fund too and their investments will be disclosed to the public
- There will be no exit load
for the scheme.
- There will be no dividend option
, only a growth option.
The fund will have an expense ratio of 2%
for the direct plan and 2.5% for the regular plan.
Asset allocation for the scheme will be as follows:
India equities: 65%-100%.
Debt and money market instruments: 0%-35%.
Overseas equity investments: 0%-35%.
I am not sure what kind of expertise PPFAS has in overseas investments. A 35% upper limit for overseas investments looks too high to me.
Also, overseas investments will expose investors to currency risks.
It would have been better if the company had offered a second scheme with no overseas exposure. I am sure there are many investors who want to invest only in India.
e.g. NRIs can directly in foreign equities and thus may not like the idea of their money being rerouted into overseas investments via an Indian mutual fund.