Principal SMART Equity Fund, an open-ended equity scheme, is a P/E (Price to Earning Ratio) based fund which dynamically changes its asset allocation between equities and debt / money market instruments based on the weighted average price-earnings ratio (P/E ratio) of the S&P CNX Nifty Index (NSE Nifty). When the markets become expensive in terms of a set ‘P/E Ratio'; the scheme will reduce its allocation to equities and move assets into debt and / or money market instruments and vice versa. Such a strategy is expected to optimize the risk-return proposition for the long-term investor.
Speaking at the launch of the new fund Mr. Sudipto Roy, Business Head, Principal Mutual Fund said “Principal SMART Equity Fund is a product that aims to make the best of any market swing. It is based on the P/E based model that enables asset allocation to be managed by moving investments strategically across equities and debt based on certain pre-set conditions and time periods set by the fund. And all this is done ‘automatically' as part of the fund's strategy. We are confident about this product and look forward to a positive response from investors.”
Elaborating on the fund Mr. Rajat Jain, Chief Investment Officer, Principal Mutual Fund and Fund Manager said “The Principal SMART Equity Fund is a fund that follows the basic rule of investing – Buy Cheap and Sell Dear. Not many people are able to do it successfully, which is why you see a disconnect between returns of market and returns of the investor. This scheme does it for you, regularly and automatically, as defined in the scheme information document based on pre-set P/E ratio levels. This scheme is suited for investors looking for long term investments without worrying about market gyrations.”
The scheme offers two options viz. growth and dividend option.
The scheme would allocate upto 100% of assets in equity & equity related instruments of large cap companies with medium to high risk profile. It would at times allocate upto 100% of assets debt or money market securities and /or units of money market / liquid schemes of Principal Mutual Fund with low to medium risk profile.
Investment in derivatives shall be upto 50% of the net assets of the scheme. Deployment upto 50% of its total net assets of the scheme shall be in stock lending, which is subject to the SEBI regulations.
The minimum application amount is Rs 5000 and any amount Rs 1 thereafter. It also offers Systematic Investment Plan (SIP) for a minimum six installments of Rs 500 each.
The scheme will charge an exit load of 2% for exits upto 1 year, 1% for upto 2 years and nil for after 2 years.
Source: http://www.apollosindhoori.cmlinks.com/MutualFund/MFSnapShot.aspx?opt=9&SecId=10&SubSecId=22,24#
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