The Edelweiss Mutual Fund House is launching their Edelweiss Select Midcap Fund which will be a new entry in the mutual fund space from the brokerage house of Edelweiss. Edelweiss has been in news for their growth and expansion plans, which are expected to be beyond the usual trading and brokerage business, and the lauch of this Midcap based Mutual fund is a step in that directions.
In this article, we will analyze how good is this Edelweiss Select Midcap Fund NFO, whether this Edelweiss Select Midcap Fund offers anything new or unique for the investors and whether the investors should invest in Edelweiss Select Midcap Fund.
Edelweiss Select Midcap Fund NFO: Review Analysis & Details
Let's begin with some basic details about Edelweiss Select Midcap Fund.What are the NFO dates for Edelweiss Select Midcap Fund?
The NFO period for Edelweiss Select Midcap Fund is currently open (from 4th August 2011) and will close on 18th August 2011. After the NFO period, the regular buying and redemption of fund units will start, but the precise date is not known.
What is so unique about this Edelweiss Select Midcap Fund?
We've covered a lot about Mutual Funds and ETF's in detail with examples of returns calculations in our articles like Example of Nifty based ETF. However, please note that this is NOT an ETF, it a normal mutual fund which will be based upon the End of the day NAV pricing for mutual fund units.
This new Mutual Fund from Edelweiss is expected to work the same way as any other mutual fund - Collect money from investors, pool it together, purchase shares from mid-cap sector belonging in the midcap range of top 101-300 stock and attempt to generate the returns.
So in essence, there is nothing very unique about this Edelweiss Select Midcap Fund. Just another mid-cap based mutual fund in the Indian Stock market giving more choices to the investors to bet their money on the mid-cap sector (as well as on the stock picking skills of the Edelweiss fund manager)
The asset allocation for Edelweiss Select Midcap Fund will be as follows:
80% to 100% will be invested in the Equities in the mid cap company stocks of top 101 to 300 companies by market capitalization.
Rest 0-20% will be in debt and money market instruments for unit redemption and creation purposes.
What are the other competitor products available in comparison to Edelweiss Select Midcap Fund?
As mentioned above, there are lots of other mid cap funds available in India for investment. Here are a few Standard Chartered Small and Mid cap Equity Fund, an ETF in midcap space Motilal Oswal MOSt Shares M100 ETF-Fund, IDBI Nifty Junior Index Fund, etc.
We also have a comparative article on the performance of the Mid cap sector v/s large cap sector with some calculations, as explained in this article: Large Cap ETF v/s Mid Cap
The Edelweiss Select Midcap Fund will track the standard benchmark index BSE Mid-Cap Index for tracking its performance.
What are the risks of investing and trading Edelweiss Select Midcap Fund?
By investing in such a fund, you are taking the risk on overall midcap market. If the midcap sector collapses, then so will be the fate of your investments in this fund.
Along with that, you are also taking the risk on the performance of your fund manager. If the fund manager is not able to replicate the stocks in the same proportion as that of underlying index, your returns might suffer (it might perform better than benchmark also, although a rare case)
You are also taking the tracking error risk. Since not 100% of your money will get invested in this fund (only 80%-100%), the tracking error comes in.
Final Thoughts about Edelweiss Select Midcap Fund?
Nothing special, just another midcap based fund adding to the long list of midcap funds already available in the Indian markets.
See List of All Mutual Fund and NFO Articles here
During NFO period each unit cost Rs. 10 per unit
Minimum investment Rs 5,000 and in multiples of Re 1 afterwards.
No tax benefit will be available in Edelweiss Select Midcap Fund
Mr. Paul Parampreet and Nandik Mallik will be the fund manager for Edelweiss Select Midcap Fund.
Multiple options available for investments in Edelweiss Select Midcap Fund :
Growth Option
Dividend Option - Payout, Reinvestment facilities
Edelweiss Select Midcap Fund Entry Load: Nil
Edelweiss Select Midcap Fund Exit Load: 1% if exit within 1 year, NIL afterwards.
SIP or systematic investment plan? No concrete info, but expected to be avaialble post NFO period.
No tax benefit will be available in Edelweiss Select Midcap Fund
BSE Mid-Cap Index will be the benchmark index for tracking the performance of Edelweiss Select Midcap Fund
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