daiwa case analysis


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daiwa case analysis

  1. 1. DAIWA EQUITY FUND Section 1 Group 2 PAAATH FT 12113 Anuja Dash FT 12189 Pramod Ravi Shankar FT 12127 Harendra Singh FT 12168 Tushar Arora FT 12104 Abhilash Mohapatra FT 12102 Abhay Bohra
  2. 2. Introduction : DAIWA EQUITY FUND An open ended equity scheme Offer of Units of Rs. 10/- each for cash during the New Fund Offer and continuous offer for Units at applicable NAV based prices Name of Mutual Fund: Daiwa Mutual Fund Name of Asset Management Company: Daiwa Asset Management (India) Private Limited Sponsor : Daiwa Asset Management Co. Ltd. is the sponsor of Daiwa Mutual Fund Name of Trustee Company: Daiwa Trustee Company (India) Private Limited which holds the property of the Mutual Fund in trust for the benefit of the unit holders . Daiwa Equity Fund –Section 1, Group 2 2
  3. 3. History of DAIWA as an AMC Daiwa Securities Group Inc., the parent company was established in 1902 Daiwa Securities Group ‘s three core business segments ◦ Retail Securities ◦ Wholesale Securities ◦ Asset Management Daiwa Asset Management Co. Ltd. ("DAM"), the asset management arm of the Daiwa Securities Group was incorporated in 1959 Second-largest mutual fund management company in Japan More than 300 Mutual Funds Managed world-wide USD 126 billion of assets under management. 109 years old diversified group with 51 years of experience in Asset management Daiwa Equity Fund –Section 1, Group 2 3
  4. 4. Scheme Details For initial Purchase Rs. 5,000/- and in multiples of Re. 1/- thereafter No Entry Load Exit load – 1% of applicable NAV if redeemed within 1 year of allotment, none after that Portfolio turnover of the Scheme is not expected to be very high The benchmark for the Scheme is BSE-200 index due to is like appropriate composition Redemption Options:  Growth option: No Dividend will be declared.  Dividend option: Dividend Payout and Dividend Reinvestment sub options Daiwa Equity Fund –Section 1, Group 2 4
  5. 5. Investment Objectives Main Objective: Growth and income The Scheme seeks to generate long-term growth of capital by investing in a diversified portfolio of predominantly equity and equity- related securities Stocks that have sustainable business models, and potential for income and capital appreciation Debt would also be used in the fund portfolio besides a wide range of other investment options like money market and derivative instruments Daiwa Equity Fund –Section 1, Group 2 5
  6. 6. Investment Instruments Options Equity and equity related securities Debt obligations of the Government of India, state and local governments , government agencies, statutory bodies, public sector undertakings, etc Money market instruments Pass through, Pay through or other Participation certificates Deposits of Scheduled Commercial Banks Foreign Securities Derivative instruments Other mutual funds Daiwa Equity Fund –Section 1, Group 2 6
  7. 7. Equity – Debt Allocation A mix of Equity and Debt instruments selected Asset Allocation Instrument Minimum Maximum Risk ProfileEquity and equity relatedsecurities 65 100 HighDebt and Money marketInstruments 0 35 Low to MediumInvest in companies with good growth prospects available atreasonable valuations.Combination of Growth and Value strategies to manage theportfolio.Select companies which have a significant probability of ahealthy appreciation in the medium term Daiwa Equity Fund –Section 1, Group 2 7
  8. 8. Bench Mark Index BSE 200 has grown at mean rate of 20.76% and standard deviation of growth rate is 41.76%, which is very high for the past 19 years So the Returns are very low and volatile, not worth the risk we are taking Even for the past 5 years ie 2006 -2010 mean rate of 30% with standard deviation of growth rate is 55% Daiwa Equity Fund –Section 1, Group 2 8
  9. 9. Statistics Growth 1991-2010Mean 20.76427624Standard Error 9.581937257Median 16.06557377Mode #N/AStandard Deviation 41.76669619Sample Variance 1744.45691Kurtosis -0.346008768Skewness 0.247390374Range 150.8921473Minimum -56.47590361Maximum 94.41624365Sum 394.5212485Count 19 Daiwa Equity Fund –Section 1, Group 2 9
  10. 10. Statistics Growth 2006-2010Mean 29.66523Standard Error 24.61734Median 39.54469Mode #N/AStandard Deviation 55.04605Sample Variance 3030.068Kurtosis 1.265268Skewness -1.01648Range 145.0572Minimum -56.4759Maximum 88.58131Sum 148.3261Count 5 Daiwa Equity Fund –Section 1, Group 2 10
  11. 11. Investor Profile AssumptionsInvestor Profile 25 – year old Steady job Has adequate insurance cover Regular cash flows in terms of Salary paycheck Enough Emergency Cash ReserveTime Horizon – 3 to 5 yearsReturn Expectations – Greater than index returns  High Risk Appetite Daiwa Equity Fund –Section 1, Group 2 11
  12. 12. Recommendation We recommend that given the said Fund’s investment objective and returns strategy vis-à-vis the investor profile and risk appetite , the investor should BUY !! Daiwa Equity Fund –Section 1, Group 2 12
  13. 13. Reasons for the Recommendation Daiwa Group’s 100 year legacy makes it trustworthy Experience and expertise as Asset managers in the Japanese Market Alignment of investor expectations with the scheme goals Aggressive equity exposure presents an opportunity to earn high returns The associated risks are within the young investor’s risk appetite Daiwa Equity Fund –Section 1, Group 2 13
  14. 14. Daiwa Equity Fund –Section 1, Group 2 14
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