Opportunities come in all shapes and sizes · Edelweiss Multi Cap Fund Opportunities come in all shapes and sizes ... NIFTY 50 Portfolio FY19E EPS growth (%) 14.7 23.9 FY20E EPS growth

Edelweiss Multi Cap Fund

Opportunities come in all

shapes and sizesMarch 2019

Flexibility is important in investing

2

Whereas the reeds below flew with every breeze – Like the one who adapts flexible investing approach

The mighty Oak tree thought he was far stronger than the reeds below– Like a static investment strategy

Flexibility helps you in al storms

3

…but one day, when the storm came, reeds found the way to weather the most violent of the storm. On the other hand, the Static Oak tree was in the spot

of bother and was the first to fall pray for it.

In the face of uncertainty/Instability, it always makes sense to adapt a flexible approach. Multi-Cap approach provides similar flexibility in investing.

Multi-Caps offer flexibility to diversify

4

Exposure to 20 different sectors*

Capture relatively attractive opportunities

across Large, Mid & small-cap stocks

Diversified allocation across

Market-caps

Sector Diversification

*Sectors in Nifty 500 Index

Multi-caps return are better than large-caps

5

4.6

7%

%

11

.99

%

9.1

9%

7.6

1%

12

.68

%%

19

.87

%

13

.95

%

10

.97

%

7.3

7%

%

14

.61

%

10

.82

%

8.3

2%

3 YRS 5 YRS 7 YRS 10 YRS

Large Cap Midcap Multi-Cap

Performance (CAGR)

Source: NSE. The data is for the day ending at 28/3/2018. Large-cap – Nifty, Midcap – NSE Midcap100, MultiCap – NSE500. Above data is only for illustrating purposes. Please note that past performance may or may not sustain in future.

Multi-cap Returns are less volatile than Midcaps

6

12

.76

%

13

.78

%

14

.58

%

20

.44

%

15

.90

%

16

.21

%

16

.19

%

19

.55

%

15

.90

%

16

.21

%

16

.19

%

19

.55

%

3 YRS 5 YRS 7 YRS 10 YRS

Large Cap MidCap MultiCap

Annualised Standard Deviation


MULTI-CAPS TEND TO OUTPERFORM LARGE CAP INDEX IN BULL

MARKET AND CONTROL DOWNFALL MORE THAN MID AND SMALL

CAP IN BEAR MARKET.

Historically, Multi-Caps have displayed resilience

7

-18

%

50

%

-53

%

72

%

-16

%

10

%

28

%

-21

%

22

%

0%

64

%

-64

%

10

6%

-24

%

4%

42

%

-12

%

30

%

-22

%

55

%

-58

%

80

%

-19

%

9%

32

%

-19

%

25

%

D O T C O M B U B B L E

I N F R A S T R U C T U R E A N D G L O B A L L I Q U I D I L T Y

S U B - P R I M E C R I S E S

P O S T S U B - P R I M E C R I S E S P E A K

H I G H I N F L A T I O N A N D G R O W T H

S L O W D O W N

G L O B A L R A L L Y F O L L O W I N G U S

R E B O U N D

P O S T E U R O P E A N C R I S E S

C H I N E S E S L O W D O W N

G L O B A L L I Q U I D I T Y A N D

D O M E S T I C R E F O R M S

1 1 - F E B - 0 0 2 5 - A P R - 0 3 0 7 - J A N - 0 8 0 9 - M A R - 0 9 0 5 - N O V - 1 0 3 0 - J A N - 1 2 2 8 - J U N - 1 3 2 7 - F E B - 1 5 2 9 - F E B - 1 6

2 5 - A P R - 0 3 0 7 - J A N - 0 8 0 9 - M A R - 0 9 0 5 - N O V - 1 0 3 0 - J A N - 1 2 2 8 - J U N - 1 3 2 7 - F E B - 1 5 2 9 - F E B - 1 6 3 0 - A P R - 1 8

Large Cap MidCap Multi Cap

Source: NSE. Large-cap – Nifty, Midcap – NSE Midcap100, MultiCap – NSE500.

Balanced performance throughout the years..

8

Year Ended Large-Caps Mid-Caps Multi-Caps

2001 -16% -30% -23%

2002 3% 24% 10%

2003 72% 138% 98%

2004 11% 25% 18%

2005 36% 35% 36%

2006 40% 29% 34%

2007 55% 77% 63%

2008 -52% -59% -57%

2009 76% 99% 89%

2010 18% 19% 14%

2011 -25% -31% -27%

2012 28% 39% 32%

2013 7% -5% 4%

2014 31% 56% 38%

2015 -4% 6% -1%

2016 3% 7% 4%

2017 29% 47% 36%

Resilient than Midcaps during

bear market

Better than large-caps during bull

market

Source: Bloomberg

WE CREATED A MULTI -CAP PORTFOLIO THAT INVESTED IN A

40/30/30 PROPORTION IN NIFTY 50, NIFTY MIDCAP AND NIFTY

SMALL CAP INDEX RESPECTIVELY

Multi-caps offer better risk reward proposition

9

Particulars Large Cap Mid-capMulti-Cap Portfolio*

Index Returns 12.45% 15.59% 14.66%

Value of 1000 invested* 5,340 7,913 7,049

Annualised Standard Deviation 21.99 21.66 21.09

Sharpe Ratio 0.57 0.72 0.70

*Value of 1000 invested from 1/1/2004 – 31/3/2018

The returns provided were almost similar to Midcap stocks, But wait! Risk is lower than Large and Midcaps!


T H E I N V E ST M E N T O B J EC T I V E O F T H E S C H E M E I S TO G E N E R AT ELO N G - T E R M C A P I TA L A P P R EC I AT I O N F R O M A D I V E R S I F I E DP O RT F O L I O T H AT P R E D O M I N A N T LY I N V ES T S I N EQ U I T Y A N DEQ U I T Y - R E L AT E D S EC U R I T I E S O F C O M PA N I E S A C R O S S VA R I O U SM A R K E T C A P I TA L I Z AT I O N .

Investment Strategy

Identifying compounding businesses from the universe of large, mid and small cap stocks

No compromise on quality- higher degree of due diligence

Aim to benefit from both sources of return :

Compounding of earnings

Valuation re-rating

Edelweiss Multi-cap Fund

10

Scheme Information

Scheme Open Ended Scheme

Inception Date 3rd Feb 2015

Fund Manager Harshad Patwardhan

Benchmark Nifty 500 TR Index

Standard Deviation 14.78%

Beta 1.03

Data as on 28th Feb 2019

Portfolio Allocation Strategy

11

Strategic Allocation

• Buy and hold kind of a Approach.•Compounding Business•Proven track record over long periods•Structural growth story with a high quality business & management.

Tactical

•Business in cyclical industry•Well Levered to the upturn

•Bought and sold depending on the phase of the cycle and valuations

Option

•Business offering potentially Large scale-up opportunity•Typically has a higher degree of risk.•Have a 1 or 0 kind of a payoff

Defensive

•It is a position that is more of a defensive posture•Protecting from any probable market downside

68.92%

18.51%

2.95%

9.61%


Portfolio Positioning

12

Fund Facts

Top 10 Holding (%) 41.35%

Net Equity 93.01%

Turn over Ratio (Only Equity) 0.86

Top 10 Active Bets

Stock % Holding

Aditya Birla Fashion and Retail Ltd. 1.57%

Praj Industries Ltd. 1.44%

GlaxoSmithKline Consumer Healthcare Ltd.

1.41%

Havells India Ltd. 1.40%

Axis Bank Ltd. 1.40%

RBL Bank Ltd. 1.32%

The Indian Hotels Company Ltd. 1.30%

Dabur India Ltd. 1.30%

AAVAS FINANCIERS LIMITED 1.28%

City Union Bank Ltd. 1.28%

Data as on 28th Feb 2019,. Active bets are stocks in which the fund is overweight compared to benchmark

Portfolio Characteristics

13

NIFTY 50 Portfolio

FY19E EPS growth (%) 14.7 23.9

FY20E EPS growth (%) 24.1 27.8

PEG (x) 0.9 0.9

FY19E ROE (%) 13.9 14.3

FY20E ROE (%) 14.5 16.1

PER FY19E (x) 20.7 28.4

PER FY20E (x) 16.7 22.2

Portfolio Quality Sector Allocation

SectorOver

weight %

SectorUnderweight

%

Consumer 4.73 Oil & Gas -6.22

Others * 3.30 Auto -4.89

Financials 1.92Metals/ Minerals -3.30

Source: Internal data. Data ending 28th Feb 2019. *Includes Chemicals, Fertilisers and Pesticides, Hotels, Papers, Retail, Textiles, Transportationetc. Portfolio quality is represented by Estimated Return on Equity. Return on equity (ROE) is the amount of net income returned as apercentage of shareholders equity. Return on equity measures companies profitability by revealing how much profit a company generates withthe money shareholders have invested. EPS is net profit divided by total number of outstanding shares. Valuation is represented by price-earnings ratio (P/E Ratio). It is the ratio for valuing a company that measures its current share price relative to its per-share earnings.

Performance

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Period

Scheme - Regular PlanBenchmark (Nifty500 TR

Index)Additional Benchmark (Nifty

50 TR Index)

Returns*Value of Rs.

10000 Invested

Returns*Value of Rs.

10000 InvestedReturns*

Value of Rs. 10000 Invested

1 Year -3.98% 9,602 -2.08% 9,792 4.32% 10,432

3 Year 18.14% 16,489 16.88% 15,965 17.20% 16,099

5 Year NA NA NA NA NA NA

Since Inception -Regular Plan

7.91% 13,635 7.01% 13,175 6.64% 12,992

Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments.* CAGR Return.Different plans shall have different expense structure. The performance details provided herein are of Regular Plan of Edelweiss Multi-Cap Fund.Returns are for Growth Option only. Since Inception returns are calculated on Rs. 10/- invested at inception of the scheme. In case the start/end dateis non business day, the NAV of previous day is used for computation.Since the scheme is in existence for more than 3 year but less than 5 years hence performance data for 5 years and more is not provided.

Data Source: Ace MF, Data as on 28th Feb 2019 In case the start/end date is non business day, the NAV of previous day is used for computation. Pleaseclick on http://edelweissmf.com/Download/factsheet.aspx for performance of other funds managed by fund manager.

http://edelweissmf.com/Download/factsheet.aspx

True-to-Label – Bill Board

15

Buy and Hold approach

Active Management

43% of the portfolio is away from the

benchmark.

Well Diversified

• 62 Stocks

• 20 Sectors

Large cap, 67.8%

Mid cap, 22.0%

Small cap, 10.1%


Investment Process

16

Independent

Stock position

Sizing the

bets

Risk

assessment

Resizing

the bets

Focused

portfolios

Understanding sources of returns

Focus on total sectoral active exposure &

diversification

Incorporating new

information & stock ideas

Selectivity, scrutiny, high conviction

Classification:Strategic | Tactical | Defensive | Option

Scoring:Business | Management | Growth | Valuations | Circumstances

Liquidity

Probabilistic approach

Expected return

Earnings progression | Valuation changes | Dividend

New Research

17

CIO, EQUITIES, EDELWEISS ASSET MANAGEMENT

Harshad Patwardhan

18

With education from IIT/IIM, CFA charter and 25 years of industry experience, meet our CIO Equities – Mr. Harshad Patwardhan.

Harshad was the CIO Equities at JPMorgan Asset Management for over a decade and continued as the CIO Equities of Edelweiss Asset Management after the schemes changed hands in the year 2016. He’s responsible for long only equity mutual funds at Edelweiss Asset Management Limited.When not occupied with work, he loves to swim or read about a wide range of topics. His resilience to come out of difficult times has been an inspiration to many.

He has worked for 12 years on the sell side with various MNC brokerage firms and has been a rated research analyst by several large & prominent FIIs. He believes that the first-hand experience of covering stocks/sectors and interacting with experienced fund managers has been extremely valuable for his investment management career.

Disclaimer

19

This document is intended Distributors Only.

This document is for information purposes and

private circulation only and is not an offer to sell

or a solicitation to buy any mutual fund units /

securities or to have business relations with

Sponsor/ AMC/ Trustee Company and its

associates or Edelweiss Mutual Fund. These

views alone are not sufficient and should not be

used for the development or implementation of

an investment strategy.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

All opinions, figures and estimates included in this document (unless as specified in the document) are as of this date andare subject to change without notice. It should not be construed as investment advice to any party. Neither Sponsor/ AMC/Trustee Company and its associates nor Edelweiss Mutual Fund or any person connected with it, accepts any liability arisingfrom the use of this information. Utmost care has been exercised while preparing the document, and Sponsor/ AMC/Trustee Company and its associates or Edelweiss Mutual Fund does not warrant the completeness or accuracy of theinformation and disclaims all liabilities, losses and damages arising out of the use of this information. The recipient of thismaterial should rely on their investigations and take their own professional advice. Investment decisions of the AMC maynot always be profitable.

Opportunities come in all shapes and sizes · Edelweiss Multi Cap Fund Opportunities come in all shapes and sizes ... NIFTY 50 Portfolio FY19E EPS growth (%) 14.7 23.9 FY20E EPS growth

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