IIFL Asset Management Ltd (IIFL AMC) announced the launch of IIFL Capital Enhancer Fund – Series 1 (An Annual Interval Scheme investing in Equity and Equity Related Securities) (‘the scheme’), a scheme that aims to provide the benefits of equity upside with a hedge against the market downside. The scheme is structured as an Annual Interval Scheme, with an objective to achieve long term capital appreciation by investing in equity and equity related securities, with strategy of hedging the portfolio with Nifty 50 Put Option and other Equity derivatives.
The asset allocation scenario in India suggests that investors prefer fixed income over equity. This arises from the perception that fixed income provides regular and stable returns as well as security of capital, whereas equity infuses a sense of risk. However, investors discount the fact that though equities seem volatile in the short term, they create wealth in the long term.
Mr. Amit Shah, CEO, IIFL Asset Management Business said: “IIFL Asset Management understands investors’ sentiment towards equity risks and intends to address their concerns by offering them improved prospects. The IIFL Capital Enhancer Fund- Series 1 is tailored with an objective to limit the downside by investing in a ‘put option’ thus providing the investor a hedge against a market correction. Our Studies have shown that 95% of portfolio returns in long term are derived from appropriate asset allocation and only 5% derived from product selection. IIFL Capital Enhancer Fund – Series 1 aims to offer comfort to long term investors to focus on appropriate asset allocation rather than being worried about short term volatility.”
The scheme will invest predominantly in large cap portfolio and hedge the portfolio with the Nifty 50 Put Option. This allows investors to invest in a theme that aims to ‘minimise the risk and maximise the upside.’ The scheme aims to generate alpha by limiting the downside with a potential to an uncapped upside. The Annual Interval feature allows investors an option to subscribe or exit during the specified transaction period every year.
Mr. Prashasta Seth, CEO, IIFL Asset Management Limited and Fund Manager of the scheme said: “The Capital Enhancer Fund- Series 1 is designed to suit the needs of our investors. India is in a very exciting phase; people are slowly identifying value in long-term investment and opening up to the risks involved as well. Our latest offering specifically addresses investors’ apprehensions by aiming to reduce the risks involved. IIFL Asset Management has always been successful in creating a niche for itself in the industry by moving away from regular products. Our previous offering(s) under Alternative Investment Funds category i.e. IIFL Special Opportunities Fund focusing on Pre-IPO and IPO space, introduced in India for the first time, has garnered USD 1.1 billion (as on 31st December 2017) and has become one of the largest AIFs in the country.”