NFO Analysis: ITI Long Term Equity Fund
ITI Mutual Fund, the youngest fund house in India has come out with its third offerings. The fund house has launched ITI Long Term Equity fund as their third fund. This scheme started for subscription on 15 July 2019 and will end on 14 October 2019. The fund is categorised under Equity Linked Savings Schemes (ELSS), which give tax benefit under section 80C.
Objective: The fund’s objective is to provide long-term capital appreciation by investing predominantly in equity and equity-related securities. The Asset Allocation Pattern of the Scheme under normal circumstances would be minimum 80 per cent in equity which can go up to 100%. While in debt instruments such as CP, commercial bills, corporate debt, T-Bills etc, will not exceed 20 per cent.
Strategy: ITI Mutual fund follows the SQL investment philosophy for its funds where S is for Margin of Safety, Q stands for Quality of Business and L for Low Leverage. The fund will follow a bottom-up approach in picking stocks taking a long term view and follow 'Growth at reasonable price' (GARP) style.
The fund will invest in a diversified basket of equity stocks spanning the entire market capitalisation spectrum and across multiple sectors, debt and money market instruments. The fund would identify companies for investment, based on the following criteria amongst discussed above:
1. Good track record of the company
2. Potential for future growth
3. Industry economic scenario
The fund will also invest a portion of the funds in initial offerings and other primary market offerings.
Fund Manager: The scheme will be together managed by Pradeep Gokhale and George Heber Joseph. Gokhale is Senior Fund Manager and Head of Research at ITI Mutual fund. Before this, he was Senior Fund Manager at Tata Mutual Fund and was managing funds such as Tata Pure Equity Fund, Tata Ethical Fund, etc. While Joseph is CEO & CIO at ITI Mutual Fund and was earlier associated with ICICI Pru MF.
Our Recommendation:
There are already 41 funds in this category. Almost all the fund houses have ELSS schemes. This is the second fund in this category that is being launched within a year. On average, these funds have generated less than 2 per cent in the last one-year. Even the long-term performance of these funds has been around 10 per cent.
Top 10 ELSS funds on the basis of last one year return.
Summary of Returns by Funds in ELSS Category
Looking at the overall performance of the category, we believe this is not the right time to start investing in this category. If at all you want to start investing in ELSS, you are spoilt for choice. You can pick any one of them based on your risk profile and your financial goal.