The fund aims to enhance equity returns while protecting downside by applying quant model.
Edelweiss Mutual Fund has launched its first open-ended discretionary portfolio management service (PMS) called Beta Overlay Over Mutual Funds (BOOM). BOOM is a proprietary quant model developed by Edelweiss which aims to enhance long-term returns by managing the portfolio risk.
“The portfolio would be dynamically managed, maintaining long only equity exposure when markets are strong and hedging the long-only equity component of the portfolio with Nifty Futures, when markets are weak,” Peeyoosh Chadda, Head – Investment Advisory Group, Edelweiss AMC.
The fund is targeted at HNIs, bank treasuries, and corporates investing in mutual funds. The AMC has shortlisted 40 large cap diversified schemes in which this fund can invest in. The fund will give an option to investors to choose the underlying mutual fund schemes in which they wish to have exposure. Existing mutual fund investors can also give their mutual fund portfolios to Edelweiss to manage their portfolio under BOOM. The minimum application size of this fund is Rs 25 lakh. An investor can choose to invest, for instance, Rs 2.5 lakh in 10 mutual fund schemes.
The fund will charge an entry load of 2% on the initial contribution and 2% subsequently on all fresh inflows. It will charge a fund management fee of 2%. Exit load will be 2% if investors redeem before one year. The fund will be benchmarked against S&P CNX Nifty Index.
The PMS will mainly be sold through wealth managers and private banks. Vikaas Sachdeva, CEO, Edelweiss Mutual Fund said that this PMS is suitable to investors with three to five years horizon and wanting to shield their portfolios against volatility and limiting the downside risk.
Edelweiss AMC manages Rs 306 crore as on September 2012.
