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NFO: SBI TAX ADVANTAGE FUND-SERIES II

| January 5, 2012 | 0 Comments

SBI Mutual Fund has launched new fund offfer (NFO) as  SBI Tax Advantage Fund – SERIES II under ELSS category from December 22, 2011 as close ended fund. The scheme objective of the scheme is to generate capital appreciation over a period of ten years by investing predominantly in equity and equity-related instruments of companies across large, mid and small market capitalization, along with income tax benefit.The investment objective of the scheme is to generate capital appreciation over a period of ten years by investing predominantly in equity and equity-related instruments of companies across large, mid and small market capitalization, along with income tax benefit. Tenure of the fund is ten years.

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NFO Details

  • Start Date: 22-December-2011
  • Close Date: 21-March-2012
  • Scheme Type: Close Ended
  • Scheme Category: ELSS
  • Tenure of the Scheme: 10 Years
  • Maturity Date: 28-March, 2022
  • Load Structure: Nil
  • Offer Price: Rs. 10 per unit
  • Minimum Subscription: Rs. 500 and in multiple of Rs 500 thereafter
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As per SBI AMC,

SBI Tax Advantage Fund – Series II is a diversified equity fund. The fund will invest into equity stock of companies listed in India. The fund investment strategy is split into three parts;

1.       Asset Allocation:

The fund will invest a portion of its assets into large caps, midcaps and small caps. The proportion of the exposure to each capitalisation will depend on the following factors:

  • ·         Liquidity of stocks under each capitalisation range (e.g. Large caps are more liquid than midcaps and midcaps are more liquid than small caps)
  • ·         Trading volumes
  • ·         Market scenario (It is observed in the past that, in falling markets, large caps fall lesser (in % terms) than midcaps & small caps. It is also observed that, in rising markets, midcaps outperform (in % terms) large caps.

2.       Top down approach:

The top down approach helps identifying sectors where the portfolio should take exposure. The portion of exposure to each sector (vis-a-vis benchmark) depends on the following parameters:

  • ·         Macroeconomic view
  • ·         Policy changes
  • ·         Global trends
  • ·         Relative valuation of each sectors vis-a-vis other sector
  • ·         Risk premium (Risk-reward ratio)

3.       Bottom-up approach:

The bottom-up approach helps identifying stocks where the portfolio should take exposure. The portion of exposure to each stock (vis-a-vis benchmark and within the sector) depends on the following parameters:

  • ·         Relative valuation of each stock vis-a-vis other stock within the sector or broader market
  • ·         Management quality
  • ·         Business fundamentals
  • ·         Risks associated with business
  • ·         Ratios (PE, PB etc)

 

Since SBI Tax Advantage Fund is long term equity strategy, the portfolio would be constructed using combination of all the above segments (Asset allocation, top-down approach and bottom-up approach).

SBI Tax advantage fund – Series II will use asset allocation criteria to decide its bias on capitalisation. SBI Tax Advantage series – II may have a portfolio biased to large caps in falling markets. In rising market scenario, the portfolio may have a biased to midcap stocks (this would depend on the relative valuations). The portfolio will have a judicious bias of large caps, midcaps and small caps to benefit the considering the long term investments of investors

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Category: Blog, Mutual Fund, NFO, NRI, Tax Saving Scheme

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