New Delhi SAMCO, a broker and mutual fund distributor, has launched a mutual fund. According to Jimeet Modi, Founder, Samco Mutual Fund, the USP of the fund will be active management, unlike ‘index hugging’ which is followed by many actively managed funds. Modi highlighted the large overlap that actively managed mutual funds have with indices, causing them to underperform against indices after accounting for fees. Passive funds that simply replicate indices and charge low fees have gained ground in recent years.
SAMCO schemes will disclose their overlap with indices on a daily basis, Modi said through a metric called “active shares”. The fund will also focus heavily on “stress testing” companies, he said. These tests will be conducted with a number of parameters including corporate governance, cash flow and balance sheet that only a small number of companies will be able to deduct. This reduces portfolio volatility, Modi asserted, adding that such companies tend to fall less than the overall market on days of sharpest declines in the market. A release issued by SAMCO Mutual Fund said that only 15 out of 50 stocks in the Nifty 50 index cut the stress test.
Samco Mutual Fund will launch Flexi-Cap Fund within the first 90-120 days, Modi announced. It will invest a part of its corpus in global equities. The fund house will follow this up with a global active fund investing in foreign stocks and then a tax saver fund. According to Modi, debt mutual funds will not be on the fund house’s horizon, at least for the first few years. The fund house will target an expense ratio of 1.75-1.9% on its regular schemes and around 1% on its direct schemes. According to Modi, the mutual fund house will operate independently of SAMCO’s existing brokerage and mutual fund businesses, including RankMF, its mutual fund selection platform.
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