It is an open-ended diversified equity scheme that intends to follow a flexible approach wherein the fund manager will be able to invest across companies without any bias towards a particular sector, investing style or market capitalization range.
Investment expert Sandeep Shanbhag says, "As IEF (India equity fund) is basically a plain vanilla equity diversified scheme, it does not offer anything different from what every mutual fund already operating in the market and secondly since it is AIG's maiden offer, we cannot gauge how other schemes of the mutual fund have performed so far."
Advisor Hemant Rustagi adds, "This being the first equity product from AIG Global Investment Group in India, there is no track record to go by. On the other hand, investors have the option to invest in several existing open-ended funds with an excellent long-term track record."
On the positive, Shanbhag says, "The factor in favour of IEF is its global parentage. With worldwide operations, the fund house has tremendous experience and research capabilities. Also the fund manager, Tushar Pradhan has had a successful tenure at HDFC MF."
About AIG's global parentage:
AIG Global Investment Group is one of the leading asset management organizations in the world with more than $670 bn in assets, fund management operations in 44 offices worldwide, 1900 employees and 450 investment professionals. AIGGIG is part of American International Group, Inc, which is one of the top ten Fortune 500 Companies globally and is the world's largest insurance organization.
AIG has more than US $979 in own assets, more than 100,000 employees in 130 countries and jurisdictions and more than 65 million customers. AIG has a successful track record of investing around the world and especially in Asia and emerging markets for the last 89 years.
Saurabh Sonthalia, CEO - AIG Global Asset Management Company (India) Private Limited says, "AIGGIG's equity capability is built on a tried and tested in-house process, implemented through a state-of-the-art intranet based platform called EPIC (Equity Platform for Investment Communication). The benefits of EPIC are given below:
- Common Intranet based platform makes all fund managers and analysts 'speak the same language'; analysis of all companies in a common EPIC format enables easy comparisons across markets.
- Technology ensures that 10 Year Historical data of companies, result updates and latest analyst estimates are available online.
- Automated emails are generated through EPIC of all analyst updates ensuring immediate sharing of "Relevant Information". It enables automatic peer group review and feedback.
- It ensures Fund Manager Discipline as no company can be bought if not covered in EPIC.
- EPIC format ensures that analysts do a comprehensive review of the company fundamentals, including the answering of some key questions and generation of 3 year earning forecasts. These are then checked against third party estimates to do a "Reality Check'.
- It eliminates ad-hoc decision-making. All companies have to be rated from Strong Buy to Strong Sell in EPIC. The fund manager cannot buy companies with "Sell Recommendation" in the portfolio.
- EPIC keeps a record of all investment rationales, analyst updates and company visits for easy review and ensures transparency in fund management.
About AIG India:
"AIG has built a very strong management and fund management team in India. The CIO - Equities is Tushar Pradhan who has more than 12 years of successful track record in Indian markets. In addition, as a business philosophy, no product is offered to investors unless AIG has a meaningful stake in the asset class. This means that AIG will be investing its own money in the fund. This will help build trust among investors as its own money is invested with theirs", says Sonthalia.
To sum:
On balance, this NFO offers nothing new to the investors in terms of product differentiation and investors would be well advised to monitor the performance of AIG IEF over three years and then decide upon taking exposure, says Shanbhag.
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