IDFC MF launches Equity Opportunity Series 3

India Infoline News Service | Mumbai |

It is a 21 month close-ended diversified equity fund with a minimum amount of Rs 5,000, with a dividend pay-out and dividend sweep option.

IDFC Mutual Fund has launched ‘IDFC Equity Opportunity Series 3’ – NFO opened on Monday 10 February and closes on 24 February 2014.
It is a 21 month close-ended diversified equity fund with a minimum amount of Rs 5,000, with a dividend pay-out and dividend sweep option.
The fund aims to create a portfolio of high dividend paying companies with average dividend yield of the portfolio at least 50% higher than the benchmark dividend yield.
Investment Rationale: The macroeconomic construct for India has stagnated in the last couple of years resulting in suboptimal capacity utilization and no pricing power in the system. The RoEs and project IRR‘s today are suboptimal to embark on a fresh capex cycle. In such an environment there is opportunity to create a portfolio that will efficiently utilize their cash flows by sharing it with shareholders through dividends.
Investment Strategy: The fund would invest in companies that generate good free cash flows and the same will be utilized to pay high dividends. These are companies with good operating matrix, have no or low debt and dominant in their respective industries.
Mr. Kalpen Parekh, CEO, IDFC AMC said, “This is the third investment idea in our series of portfolios offered in this year through Equity Opportunities Funds. The overall consolidating environment is giving us an opportunity to build equity portfolios counter cyclically. Investors are under weight equity and it is better to increase allocations when valuations are favourable.”
Mr. Ankur Arora, Associate Director, IDFC AMC said, “As the current level of ROE does not incentivize fresh capex, the surplus generated in businesses will be paid out to shareholders by way of dividends. Through this fund we aim to capture opportunities available in such companies.”
 

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