IDFC Strategic Sector (5 0-50) Equity is an open ended equity- diversified, aggressive large cap fund with an objective to generate long-term capital appreciation by investing up to fifty per cent of the assets of the scheme in a ‘chosen” sector while the balance amount may be invested in companies across market capitalizations and sectors. The scheme may also invest in the derivative instruments upto 100 per cent of its portfolio, which option is mainly for enabling purpose.
The chosen sector will be the core part of the entire economy which, as per this fund, is the top 75 per cent stocks depending on market capitalization. Out of these 75 per cent stocks, 35 per cent comes from oil & gas, 20 per cent from financial services and 20 per cent from capital goods. However, the fund manager expects either the oil and gas or financial services to be a chosen sector.
The expected exposure of the fund in the large-cap segment can be in the range of 90-95 per cent, thus reducing the volatility.
Kenneth Andrade is the fund manager for this fund, who also manages funds like IDFC Premier Equity, IDFC Imperial, IDFC Classic and IDFC Enterprise. Kenneth says, “If the large part of the fund is invested in the oil & gas space, then the tracking error might be positive or negative 20 per cent and if invested in financial services, then it could be 30-40 per cent compared to its benchmark returns”. Thus, looking at the fund manager’s calibre and risk in concentrated exposures, investors with higher risk appetite should invest in this fund.
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