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Edelweiss Business Cycle Fund - NFO presentation.pdf

The document presents an analysis of sector performance and investment strategies as of June 2024, highlighting the varying returns of sectors based on historical data. It emphasizes the importance of identifying business cycles and implementing a factor-based investing approach to optimize portfolio performance. Additionally, it notes that the Edleweiss Business Cycle Fund aims for a dynamic allocation across sectors and stocks to capture trends and maximize returns.

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June 2024
Source: NSE and BSE indices data, ACEMF and Edelweiss internal analysis. Sectors have been sorted basis 2023 returns. Calendar year returns provided above. Past performance is not an indicator of future performance. HC = Healthcare Businesses yield returns on rotational basis 2 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 CAGR Realty -51% 54% -34% 11% -14% -4% 111% -33% 29% 6% 55% -11% 82% 12% Capital Goods -47% 37% -4% 52% -8% -2% 41% 0% -9% 13% 55% 17% 68% 17% Auto -18% 45% 11% 58% 0% 12% 33% -22% -9% 13% 20% 17% 49% 15% Cons Discr -22% 42% -2% 56% 9% 6% 56% -15% -1% 21% 31% -1% 40% 16% Utilities -34% 12% -12% 23% -2% 12% 32% -13% -4% 4% 70% 25% 37% 12% Pharma & HC -9% 33% 27% 44% 10% -14% -6% -7% -9% 62% 11% -11% 35% 11% Telecom -16% -3% 19% 10% 3% -21% 51% -39% 14% 14% 43% -3% 31% 7% FMCG 10% 51% 13% 20% 1% 5% 31% 15% 0% 15% 12% 20% 31% 16% IT -17% 0% 60% 20% 2% -5% 15% 26% 11% 58% 62% -24% 26% 16% Metal -48% 19% -12% 8% -29% 48% 54% -17% -10% 18% 73% 25% 19% 12% Financial Services -29% 54% -6% 59% -4% 6% 43% 11% 26% 5% 15% 10% 14% 16% Nifty 500 TRI -26% 33% 5% 39% 0% 5% 38% -2% 9% 18% 32% 4% 27% 15%
70 80 90 100 110 120 130 140 150 160 Dec-14 May-15 Oct-15 Mar-16 Aug-16 Jan-17 Jun-17 Nov-17 Apr-18 Sep-18 Feb-19 Jul-19 Dec-19 Auto 3 Source: NSE and BSE indices data, ACEMF and Edelweiss internal analysis. Index levels rebased to 100 for the respective periods chosen for each sector. Past performance is not an indicator of future performance. Every business goes through its cycle 70 90 110 130 150 170 190 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Financial Services 90 100 110 120 130 140 150 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 FMCG 70 120 170 220 270 320 370 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 IT 50 100 150 200 250 300 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Realty 70 90 110 130 150 170 190 Dec-13 May-14 Oct-14 Mar-15 Aug-15 Jan-16 Jun-16 Nov-16 Apr-17 Sep-17 Feb-18 Jul-18 Dec-18 May-19 Oct-19 PHARMA An effective investment strategy is required to capture the up cycle and avoid the down cycle.
4 Defensives FMCG Healthcare Traditional approach to identify business cycles 1. Identify Macro- economic cycle 2. Identify business cycle and sectors Cyclicals Banks Industrials Growth Discretionary IT 3. Identify stocks within these sectors HUL Divi’s Lab ITC ICICI Bank L&T HDFC Bank TVS Motor Persistent Sys Tata Motors The above is for illustration only. The sectors/stocks mentioned should not be construed as a recommendation and the fund may or may not have exposure to these stocks currently or in the future. Weaknesses of this approach Macroeconomic conditions may change rapidly Judgment-based timing can cause wrong entry and exit points Turnaround calls may become value traps Full Recession Early Recovery Full Recovery Early Recession
5 Most diversified portfolios miss business cycles Source: ACEMF and Edelweiss internal analysis. Portfolio of select flexicap funds provided above for illustration only. Data provided for end of March for each financial year. Industry (Allocation %) Fund A Fund B Fund C Nifty 500 FY21 FY22 FY23 FY24 FY21 FY22 FY23 FY24 FY21 FY22 FY23 FY24 FY21 FY22 FY23 FY24 Financial Services 33 35 37 38 29 29 30 23 30 28 32 28 32 29 32 28 Information Technology 8 6 12 8 12 13 8 7 11 9 6 5 13 14 11 10 Oil, Gas & Consumable Fuels 11 15 8 2 11 9 7 9 9 8 7 8 10 11 10 9 Fast Moving Consumer Goods 5 4 1 1 6 3 4 3 5 4 7 6 8 7 9 7 Automobile and Auto Components 5 4 6 6 5 3 7 10 4 3 6 6 5 4 5 7 Healthcare 8 6 9 13 3 3 3 4 5 5 3 3 5 5 5 5 Capital Goods 7 7 7 6 5 7 9 12 4 3 3 3 3 3 4 5 Power 10 8 6 5 - - - 1 1 2 2 3 2 3 3 4 Metals & Mining 1 - - 0 2 4 4 5 4 4 2 2 3 4 3 3 Construction 6 5 3 1 4 4 5 5 3 3 3 4 2 2 3 3 Top 10 of Nifty 500 index 93 92 87 79 77 75 78 78 76 68 71 67 85 83 84 82 Sector rotation is missing in traditional diversified funds.
Factor investing approach 6 Introducing
What is Factor investing? 7 Stock selection based on current data Strong proven relationship with stock returns Aims to generate excess returns Long-term back testing Rule based, hence no judgemental calls Factor investing involves selecting stocks based on certain characteristics that are believed to contribute to their performance.
Key factors that drive stock returns 8 Feature Metrics E.g.: Sound balance sheet stocks High growth with future potential Relatively inexpensive stocks Rising stocks ROE, ROCE, Debt to Equity Revenue, EBITDA, PAT growth rate Low valuation ratios like P/E, P/B 3m/6m/12m price change Maruti, Godrej Consumer, Divi’s Lab ICICI Bank, Bajaj Finance, Titan SBI, ONGC, Tata Steel Tata Motors, TVS, Trent, REC An investment factor is a specific feature of a security that explains its risk and expected return. Quality Growth Value Momentum Factors The stocks mentioned should not be construed as a recommendation and the fund may or may not have exposure to these stocks currently or in the future.
Full Recovery Early Recession Early Recovery Full Recession An informed way of identifying business cycles 9 The above is for illustration purpose only. It demonstrates identification of business cycles using factor investing approach. The stocks mentioned should not be construed as a recommendation and the fund may or may not have exposure to these stocks currently or in the future. 1. Identify factors driving stock returns 2. Identify stocks that are doing well using factors 3. Arrive at sectors doing well in current business cycle Quality Growth Momentum HUL Divi’s Lab ITC ICICI Bank L&T HDFC Bank TVS Motor Persistent Sys Tata Motors Healthcare FMCG Banks Industrials Auto Info Tech Strengths of this approach Data and evidence backed identification of business cycle trends Focus on “What is doing well vs What will do well”
Factor tilts vary across periods 10 Factor tilts are provided basis an internal model on top 500 stocks. Value Growth Momentum Quality Momentum Growth Value Momentum Quality Quality Momentum Growth Value Momentum Quality Momentum Growth Value Growth Growth Quality Momentum Momentum Growth Momentum Quality Value Growth Momentum Momentum Value Quality Quality Quality Quality Value Value Value Value Value Value Growth Growth Growth 33% 5% 39% 0% 5% 38% -2% 9% 18% 32% 4% 27% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Momentum Quality Growth Quality Nifty 500 calendar year returns Key factor tilts for respective years
Edelweiss Business Cycle Fund Identifying business cycles through a proprietary factor-based approach* 11 Introducing *Factor investing approach is based on internal proprietary model mentioned in the SID
02 03 Introducing Edelweiss Business Cycle Fund 12 A factor-based approach to capture trends in business cycles Investment Philosophy Key factors used in the model - Growth, Quality, Value & Momentum. Market-cap bias – Aims to maintain equal allocation between large caps and mid/small caps. 01 Our proprietary model analyses factors to spot business cycle trends. 05 06 04 The model helps in constructing a portfolio of ~60 stocks that are doing well in the current cycle. Portfolio Universe – Top 300 stocks by market capitalization. Benchmark agnostic approach with sector exposure capped at 40% and single stock exposure at 10%. Factor investing approach is based on internal proprietary model mentioned in the SID
Factors used in the process 13 Value P/E, P/B, EV/EBITDA, Dividend yield Momentum Price performance of last 3 and 12- months Growth EPS, Operating Profit & Sales growth Quality ROE, ROCE, Standard deviation The Edelweiss Business Cycle Fund evaluates businesses combining Momentum with other factors
Stock selection process using factors 14 PROCESS Risk Filters Calculate Scores Stock Selection Portfolio Construction STEPS Filter from top 300 stocks by market cap for investable universe Calculate scores for each stock across factors (Quality, Growth, Value & Momentum) Select top ranked stocks from each factor combination based on their scores (Value+Momentum; Growth+Momentum; Quality+Momentum) Construct portfolio of ~ 60 stocks across large cap and mid/ small cap universe
Back-testing of proprietary model performance 15 Data as on 31st May 2024. Performance is based on the back testing of proprietary model gross of expenses. CAGR provided above. Past performance is not an indicator of future performance. Strategy performance (back-tested) Nifty 500 TRI 1 year 69% 35% 3 years 33% 18% 5 years 29% 18% 7 years 22% 15% 10 years 24% 15%
38% 13% 53% 11% 11% 48% -6% 7% 25% 48% 1% 49% 33% 5% 39% 0% 5% 38% -2% 9% 18% 32% 4% 27% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Strategy performance (back tested) Nifty 500 TRI Strategy has consistently outperformed Source: Edelweiss internal analysis. Model performance is based on the Back testing of proprietary model, gross of expenses. Past performance is not an indicator of future performance. 16 Return contribution of top 3 sectors in each calendar year: Financials 8.2% Information Technology 8.3% Consumer Discretionary 20.6% Health Care 3.2% Financials 5.7% Financials 14.3% Information Technology 1.5% Financials 4.8% Health Care 16.4% Information Technology 20.4% Industrials 5.1% Financials 15.0% Consumer Staples 8.0% Health Care 3.4% Industrials 14.4% Financials 2.8% Energy 5.4% Consumer Discretionary 11.0% Consumer Staples 1.0% Health Care 2.7% Information Technology 7.8% Materials 7.2% Consumer Staples 3.6% Industrials 11.2% Materials 7.4% Consumer Discretionary 3.1% Health Care 9.5% Consumer Discretionary 2.5% Materials 3.0% Materials 5.6% Health Care 0.9% Materials 2.5% Materials 5.4% Health Care 6.8% Materials 1.9% Consumer Discretionary 6.0% Calendar year returns
-5% 0% 5% 10% 15% 20% 25% 30% 35% Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 5 year rolling returns 100% of the times outperformed Strategy Nifty 500 TRI Back-testing of proprietary model performance 17 Nifty 500 TRI Strategy performance (back tested) Min 4% -1% Max 30% 21% Avg 19% 14% SD 15.7% 16.4% Model performance is based on the back testing of proprietary model, gross of expenses. Past performance is not an indicator of future performance. Data as on 31st May 2024.
Factor based approach leads to a dynamic portfolio 18 Source: ACEMF and Edelweiss internal analysis. Factor based approach is based on internal proprietary model. Sector derived based on back testing of model portfolio Top 15 sectors for the index as on March 2024 provided above Nifty 500 Index Static sector allocation (%) Edelweiss strategy dynamic sector allocation (%) Sector Mar'21 Mar'22 Mar'23 Mar'24 Mar'21 Mar'22 Mar'23 Mar'24 Financial Services 32 29 32 28 9 3 19 22 Information Technology 13 14 11 10 20 25 3 7 Oil, Gas & Consumable Fuels 10 11 10 9 1 5 6 8 Fast Moving Consumer Goods 8 7 9 7 6 2 10 3 Automobile and Auto Components 5 4 5 7 2 5 11 11 Healthcare 5 5 5 5 22 9 5 9 Capital Goods 3 3 4 5 6 7 24 5 Power 2 3 3 4 2 6 6 10 Metals & Mining 3 4 3 3 6 9 2 3 Construction 2 2 3 3 0 0 1 1 Consumer Durables 4 4 3 3 8 2 0 5 Consumer Services 2 2 2 3 4 1 0 3 Telecommunication 2 2 2 2 1 3 0 0 Construction Materials 3 2 2 2 3 1 0 0
Strategy’s dynamic sectoral rotation Note: Sector allocation of Edelweiss’ internal model demonstrated above for illustration only. Sector derived based on back testing of model portfolio. Data as on 31st May 2024. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Metals & Mining FMCG O&G Utilities Pharma & Healthcare Technology Consumer Discretionary CapGoods Autos Financial 19 Pharma & HC Technology Capital goods Financials
6,708 13,619 15,179 20,680 16,216 50,769 0% 5% 10% 15% 20% 25% 30% 35% 40% - 10,000 20,000 30,000 40,000 50,000 60,000 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Allocation NIFTY IT - TRI Illustration: Technology exposure over the years Note: Sector allocation of Edelweiss’ internal model demonstrated above for illustration only. Source: Edelweiss internal analysis and ACE MF. Past performance is not an indicator of future performance. 20 100% 35% 200% 33% 27% 34% After a muted 2012, expanding order book, rising spends on IT in the developed world and fall of the rupee against the US dollar. Nifty IT index growth Peak allocation to IT sector in the period Tailwinds During and post pandemic, increased focus on technology. In a highly volatile and challenging environment, IT among the few sectors that performed well. Dominant factors Quality + Momentum Quality Growth + Momentum 60% 23% 110% Nifty 5O index growth
8,790 15,369 8,596 15,507 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% - 5,000 10,000 15,000 20,000 25,000 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Allocation NIFTY PHARMA - TRI Illustration: Pharma & Healthcare exposure over the years Note: Sector allocation of Edelweiss’ internal model demonstrated above for illustration only. Source: Edelweiss internal analysis and ACE MF. Past performance is not an indicator of future performance. 21 75% 80% 28% 40% Strong global growth opportunity (US being the key driver), healthy earnings visibility. Nifty Pharma Index growth Peak allocation to the Pharma index in the period Tailwinds Rally in pharma stocks during Covid owing to its resilience Dominant factors Quality + Momentum Quality Nifty 5O index growth 50% 65%
3,240 9,418 0% 1% 2% 3% 4% 5% 6% 7% 8% - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Allocation NIFTY PSU BANK - TRI Illustration: PSU Banks exposure over the years 22 Note: Sector allocation of Edelweiss’ internal model demonstrated above for illustration only. Source: Edelweiss internal analysis and ACE MF. Past performance is not an indicator of future performance. Healthy growth in advances, Net Interest Income (NII), reduction in gross Non- Performing Assets (NPAs) and strong growth in profitability. 200% PSU Bank Index growth Peak allocation to PSU Bank sector in the period Tailwinds 6% Dominant factors Value + Momentum Nifty 5O index growth 45%
5,101 10,619 15,046 27,921 0% 5% 10% 15% 20% 25% 30% - 5,000 10,000 15,000 20,000 25,000 30,000 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Allocation NIFTY AUTO - TRI Illustration: Auto exposure over the years Note: Sector allocation of Edelweiss’ internal model demonstrated above for illustration only. Source: Edelweiss internal analysis and ACE MF. Past performance is not an indicator of future performance. 23 Excise duty cut announcement boosted sentiment towards the sector. 110% Auto Index growth Peak allocation to Auto sector in the period Tailwinds 26% Dominant factors Quality + Momentum Nifty 5O index growth 65% Pent-up demand following Covid, limited supply keeping prices high, and investor optimism about profits. 85% 14% Value + Momentum 45%
8,773 19,751 30,749 57,289 0% 5% 10% 15% 20% 25% 30% 35% - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Allocation S&P BSE Capital Goods - TRI Illustration: Capital goods exposure over the years Note: Sector allocation of Edelweiss’ internal model demonstrated above for illustration only. Source: Edelweiss internal analysis and ACE MF. Past performance is not an indicator of future performance. 24 Increased infrastructure push by the government with lower interest rates. 160% Capital goods Index growth Peak allocation to Capital goods sector in the period Tailwinds 10% Dominant factors Quality + Momentum Nifty 5O index growth 65% Continued government push on infrastructure, early signs of capital goods revival. 85% 30% Value + Momentum 25%
2,048 3,999 4,344 9,350 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Allocation NIFTY METAL - TRI Illustration: Metals & Mining exposure over the years 25 Note: Sector allocation of Edelweiss’ internal model demonstrated above for illustration only. Source: Edelweiss internal analysis and ACE MF. Past performance is not an indicator of future performance. With recovery in economic activity, demand and price for metal commodities like steel, copper, aluminum rose leading to rising revenue for metal companies. 90% Nifty Metal Index growth Peak allocation to Nifty Metal in the period Tailwinds 17% Nifty 5O index growth Dominant Factors 30% Growth + Momentum 100% 8% 35% Value + Quality + Momentum Metal prices rose due to global events like Brexit, US Presidential election.
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 H1 2021 H2 2021 H1 2022 H2 2022 H1 2023 H2 2023 Large Cap Mid Cap Small Cap Model maintained consistent market cap allocation 26 Note: Market cap allocation of Edelweiss’ internal model demonstrated above for illustration only. AMFI market cap classification has been used above. At each rebalance, the portfolio has been equally split between large (top 100 stocks by market cap) and mid/small caps (Next 200 stocks by market cap)
7% 6% 6% 5% 3% 3% 3% 2% 0% 0% 0% 0% -1% -2% -4% -6% -7% -15% Capital Goods Power Financials ex Banks and NBFCs Consumer Durables Chemicals Telecommunication Realty Consumer Services Metals & Mining Public Sector Bank Automobile and Auto Components NBFC Healthcare Construction Fast Moving Consumer Goods Oil, Gas & Consumable Fuels Information Technology Private Sector Bank Model portfolio weight relative to Nifty 500 Overweight/(Underweight) Outcome of a diversified portfolio vs Index constitution 27 Absolute weight (%): Note: As on 31st May 2024. The data is based on back testing of proprietary model as mentioned in the SID. Strategy 13% 10% 12% 8% 5% 6% 4% 6% 4% 3% 8% 3% 4% 1% 3% 3% 1% 1% Nifty 500 6% 4% 6% 3% 2% 3% 1% 3% 4% 3% 7% 3% 5% 3% 7% 9% 8% 16%
Stock Sector Strategy Nifty 500 Overweight Indus Towers Ltd. Telecommunication 4.4 0.1 4.3 JSW Energy Ltd. Power 4.4 0.2 4.2 REC Ltd. Financials ex Banks and NBFCs 3.3 0.4 2.9 Thermax Ltd. Capital Goods 3.0 0.1 2.9 Solar Industries India Ltd. Chemicals 3.0 0.1 2.9 Torrent Power Ltd. Power 3.0 0.1 2.9 Phoenix Mills Ltd. Realty 3.0 0.2 2.8 Sundaram Finance Ltd. NBFC 3.0 0.2 2.8 Dixon Technologies (India) Ltd. Consumer Durables 3.0 0.2 2.8 Bajaj Auto Ltd. Automobile and Auto Components 3.3 0.6 2.7 Stock Sector Strategy Nifty 500 Underweight HDFC Bank Ltd. Private Sector Bank - 6.8 (6.8) Reliance Industries Ltd. Oil, Gas & Consumable Fuels - 5.7 (5.7) ICICI Bank Ltd. Private Sector Bank 1.1 4.6 (3.5) Infosys Ltd. Information Technology - 3.0 (3.0) Larsen & Toubro Ltd. Construction - 2.6 (2.6) ITC Ltd. Fast Moving Consumer Goods - 2.2 (2.2) Tata Consultancy Services Ltd. Information Technology - 2.2 (2.2) Axis Bank Ltd. Private Sector Bank - 1.9 (1.9) Kotak Mahindra Bank Ltd. Private Sector Bank - 1.5 (1.5) Mahindra & Mahindra Ltd. Automobile and Auto Components - 1.4 (1.4) Stock allocation vs Nifty 500 Top overweight stocks (%) Top underweight stocks (%) 28 Note: As on 31st May 2024. The data is based on back testing of proprietary model as mentioned in the SID.
Large Mid Small % holding 40% 51% 9% Sector Name % holding Capital Goods 13% Financials ex Banks and NBFCs 12% Power 10% Consumer Durables 8% Automobile and Auto Components 8% Telecommunication 6% Consumer Services 6% Chemicals 5% Metals & Mining 4% Healthcare 4% Top 10 sector holding 74% Strategy model portfolio details Stock name Sector % holding JSW Energy Ltd. Power 4.4 Indus Towers Ltd. Telecommunication 4.4 Bajaj Auto Ltd. Automobile and Auto Components 3.3 REC Ltd. Financials ex Banks and NBFCs 3.3 Dixon Technologies (India) Ltd. Consumer Durables 3.0 Sundaram Finance Ltd. NBFC 3.0 Phoenix Mills Ltd. Realty 3.0 Torrent Power Ltd. Power 3.0 Solar Industries India Ltd. Chemicals 3.0 Thermax Ltd. Capital Goods 3.0 Total top 10 stocks 33.4 Top 10 stocks 29 Data for the model portfolio provided above as on 31st May 2024. This is for illustration purpose only. The Fund may or may not invest in the above stocks in future. The data is based on back testing of proprietary model as mentioned in the SID. Top 10 sectors # of stocks 54
Factor investing expertise 30 AUM of factor-based funds ₹ 14,000 cr years of applied quantitative innovation 15 clear investment philosophy 1 Strategies being run using factors 4 Factor investment professionals 5 Note: As on 31st May 2024. The above data is for Edelweiss Balanced Advantage Fund, Edelweiss Aggressive Hybrid Fund, Edelweiss Equity Savings Fund and Edelweiss Large Cap Fund.
Our Factor Investing Team Bharat has 18 years of experience in areas of portfolio management, macro and sector research. He has earlier worked with marquee investment banks and asset management companies. His last assignment before joining Edelweiss Asset Management Limited was with DE Shaw Group, a global hedge fund, as a senior manager working on fundamental and quantitative research ideas. He has done Master in Management Studies (MMS) in Finance from N.L. Dalmia Institute of Management and Bachelor in Engineering (BE) in Electronics and Telecom from Mumbai University. Bharat Lahoti Co-Head – Factor Investing Bhavesh Jain Co-Head – Factor Investing Bhavesh started his career with Edelweiss Asset Management in January 2008 and has over 15 years of rich experience in the financial markets. He had joined in the Low-Risk Trading team which is responsible for looking at arbitrage between SGX Nifty and NSE Nifty along with normal cash-future and index arbitrage. He has done Masters in Management Studies from N.L. Dalmia Institute – Mumbai University and MBA in Finance also from Mumbai University. 31 Supported by a team of 3 analysts
Fund Features Category Sectoral/ Thematic Fund Manager Mr. Bhavesh Jain Mr. Bharat Lahoti Mr. Amit Vora (For Overseas Securities) Benchmark Nifty 500 TRI Investment Objective The Fund seeks to generate long-term capital appreciation by investing predominantly in equity and equity related securities with a focus on navigating business cycles through dynamic allocation between various sectors and stocks at different stages of business cycles in the economy. There is no assurance that the investment objective of the Scheme will be achieved. Minimum Application Amount Lumpsum: Minimum of Rs. 5,000/- and multiples of Re. 1/- thereafter. On continuous basis: Minimum Rs. 100/- and in multiples of Re. 1/- thereafter. SIP: Rs. 100/- and in multiples of Re. 1/- thereafter. NFO period 9th July 2024 to 23rd July 2024 Investments Indicative Allocation (% to net assets) Equity and Equity related instruments selected on the basis of business cycle 80% to 100% Other Equity & Equity related instruments 0% to 20% Debt and money market instruments 0% to 20% Units issued by REITs and InvITs 0% to 10% 32 For mote details on the asset allocation, please refer the SID available on website.
Inception date 20th Aug 2009 26th June 2009 26th May 2009 AUM (Rs. cr) 11,300 1,600 900 Dominant factors Quality + Growth; Trend based Asset Allocation model Quality + Growth + Momentum Quality + Growth About the strategy 14+ years track record, 1st pure play trend-based asset allocation 14+ years track record, proven multi-factor quant model in equity stock selection 15 years track record, 1st long only fund with overlay of factor investing Since inception: Fund returns 11.04% 12.30% 14.51% Benchmark returns 10.68% 12.08% 13.75% Proven record of running factor-based strategies 33 Data as on 31st May 2024. Returns are CAGR. Regular plans considered. Numbers rounded off for ease of reference. Edelweiss Balanced Advantage Fund Edelweiss Aggressive Hybrid Fund Edelweiss Large Cap Fund
Disclaimer 34 Past performance may or may not be sustained in future and should not be used as a basis for comparison with other investments. Source: Ace-MF, Data as on May 31, 2024 Period Edelweiss Aggressive Hybrid Fund Benchmark (CRISIL Hybrid 35+65 - Aggressive Index) Additional Benchmark (Nifty 50 TR Index) Returns Value of Rs 10,000 Invested Returns Value of Rs 10,000 Invested Returns Value of Rs 10,000 Invested 1 Year 30.69% 13,078 23.03% 12,310 22.95% 12,302 3 Years 17.96% 16,423 13.16% 14,497 14.44% 14,991 5 Years 16.69% 21,655 14.25% 19,482 14.93% 20,072 Since Inception 12.30% 55,740 12.08% 54,155 12.90% 60,332 Period Edelweiss Large Cap Fund Benchmark (Nifty 100 TR Index) Additional Benchmark (Nifty 50 TR Index) Returns Value of Rs 10,000 Invested Returns Value of Rs 10,000 Invested Returns Value of Rs 10,000 Invested 1 Year 29.68% 12,978 28.86% 12,895 19.57% 11,963 3 Years 16.51% 15,821 15.48% 15,404 13.92% 14,788 5 Years 15.96% 20,981 15.66% 20,714 14.63% 19,808 Since Inception 14.51% 76,750 13.75% 69,398 13.22% 64,695 Period Edelweiss Balanced Advantage Fund Benchmark (Nifty 50 Hybrid Composite Debt 50:50 Index) Additional Benchmark (Nifty 50 TR Index) Returns Value of Rs 10,000 Invested Returns Value of Rs 10,000 Invested Returns Value of Rs 10,000 Invested 1 Year 23.43% 12,350 14.77% 11,482 22.95% 12,302 3 Years 12.66% 14,304 10.08% 13,342 14.44% 14,991 5 Years 14.30% 19,523 11.63% 17,347 14.93% 20,072 Since Inception 11.04% 47,030 10.68% 44,849 12.92% 60,355
Risk-o-meters & Disclaimers 35 This product is suitable for investors who are seeking*: Scheme Risk-o-meter Benchmark Risk-o-meter To create wealth over long term and prevent capital erosion in medium term. Investment predominantly in equity and equity related securities including through arbitrage opportunities with balance exposure to debt and money market securities. To create wealth in the long term. Investment in equity and equity-related securities and fixed-income instruments. To create wealth in the long term. Investment in equity and equity-related securities including equity derivatives of the 100 largest companies by market capitalization, listed in India. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Edelweiss Balanced Advantage Fund Edelweiss Aggressive Hybrid Fund Edelweiss Large Cap Fund NIFTY 50 Hybrid Composite Debt 50:50 Index CRISIL Hybrid 35+65 - Aggressive Index Nifty 100 TRI Investors understand that their principal will be at very high risk
Risk-o-meter & Disclaimers 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. All opinions, figures and estimates included in this document (unless as specified in the document) are as of this date and are 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 arising from 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 the information and disclaims all liabilities, losses and damages arising out of the use of this information. The recipient of this material should rely on their investigations and take their own professional advice. Investment decisions of the AMC may not always be profitable. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. The above is the investment ideology which will be followed by the fund manager. However, this can change based on market dynamics, economic scenarios etc. For detailed investment strategy, risk factors of the schemes please refer to SID available on website. The representational logos used does not imply any affiliation or endorsement by the brands. These are for illustration purpose only. Please click on Factsheet for performance of other funds managed by the fund managers. 36 Edelweiss Business Cycle Fund is suitable for investors who are seeking^: • Long term capital appreciation • Investment in equity and equity related instruments with a focus on navigating business cycles through dynamic allocation between various sectors and stocks at different stages of business cycles in the economy. ^Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
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Edelweiss Business Cycle Fund - NFO presentation.pdf

  • 1.
  • 2.
    Source: NSE andBSE indices data, ACEMF and Edelweiss internal analysis. Sectors have been sorted basis 2023 returns. Calendar year returns provided above. Past performance is not an indicator of future performance. HC = Healthcare Businesses yield returns on rotational basis 2 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 CAGR Realty -51% 54% -34% 11% -14% -4% 111% -33% 29% 6% 55% -11% 82% 12% Capital Goods -47% 37% -4% 52% -8% -2% 41% 0% -9% 13% 55% 17% 68% 17% Auto -18% 45% 11% 58% 0% 12% 33% -22% -9% 13% 20% 17% 49% 15% Cons Discr -22% 42% -2% 56% 9% 6% 56% -15% -1% 21% 31% -1% 40% 16% Utilities -34% 12% -12% 23% -2% 12% 32% -13% -4% 4% 70% 25% 37% 12% Pharma & HC -9% 33% 27% 44% 10% -14% -6% -7% -9% 62% 11% -11% 35% 11% Telecom -16% -3% 19% 10% 3% -21% 51% -39% 14% 14% 43% -3% 31% 7% FMCG 10% 51% 13% 20% 1% 5% 31% 15% 0% 15% 12% 20% 31% 16% IT -17% 0% 60% 20% 2% -5% 15% 26% 11% 58% 62% -24% 26% 16% Metal -48% 19% -12% 8% -29% 48% 54% -17% -10% 18% 73% 25% 19% 12% Financial Services -29% 54% -6% 59% -4% 6% 43% 11% 26% 5% 15% 10% 14% 16% Nifty 500 TRI -26% 33% 5% 39% 0% 5% 38% -2% 9% 18% 32% 4% 27% 15%
  • 3.
    70 80 90 100 110 120 130 140 150 160 Dec-14 May-15 Oct-15 Mar-16 Aug-16 Jan-17 Jun-17 Nov-17 Apr-18 Sep-18 Feb-19 Jul-19 Dec-19 Auto 3 Source: NSE andBSE indices data, ACEMF and Edelweiss internal analysis. Index levels rebased to 100 for the respective periods chosen for each sector. Past performance is not an indicator of future performance. Every business goes through its cycle 70 90 110 130 150 170 190 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Financial Services 90 100 110 120 130 140 150 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 FMCG 70 120 170 220 270 320 370 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 IT 50 100 150 200 250 300 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Realty 70 90 110 130 150 170 190 Dec-13 May-14 Oct-14 Mar-15 Aug-15 Jan-16 Jun-16 Nov-16 Apr-17 Sep-17 Feb-18 Jul-18 Dec-18 May-19 Oct-19 PHARMA An effective investment strategy is required to capture the up cycle and avoid the down cycle.
  • 4.
    4 Defensives FMCG Healthcare Traditional approach toidentify business cycles 1. Identify Macro- economic cycle 2. Identify business cycle and sectors Cyclicals Banks Industrials Growth Discretionary IT 3. Identify stocks within these sectors HUL Divi’s Lab ITC ICICI Bank L&T HDFC Bank TVS Motor Persistent Sys Tata Motors The above is for illustration only. The sectors/stocks mentioned should not be construed as a recommendation and the fund may or may not have exposure to these stocks currently or in the future. Weaknesses of this approach Macroeconomic conditions may change rapidly Judgment-based timing can cause wrong entry and exit points Turnaround calls may become value traps Full Recession Early Recovery Full Recovery Early Recession
  • 5.
    5 Most diversified portfoliosmiss business cycles Source: ACEMF and Edelweiss internal analysis. Portfolio of select flexicap funds provided above for illustration only. Data provided for end of March for each financial year. Industry (Allocation %) Fund A Fund B Fund C Nifty 500 FY21 FY22 FY23 FY24 FY21 FY22 FY23 FY24 FY21 FY22 FY23 FY24 FY21 FY22 FY23 FY24 Financial Services 33 35 37 38 29 29 30 23 30 28 32 28 32 29 32 28 Information Technology 8 6 12 8 12 13 8 7 11 9 6 5 13 14 11 10 Oil, Gas & Consumable Fuels 11 15 8 2 11 9 7 9 9 8 7 8 10 11 10 9 Fast Moving Consumer Goods 5 4 1 1 6 3 4 3 5 4 7 6 8 7 9 7 Automobile and Auto Components 5 4 6 6 5 3 7 10 4 3 6 6 5 4 5 7 Healthcare 8 6 9 13 3 3 3 4 5 5 3 3 5 5 5 5 Capital Goods 7 7 7 6 5 7 9 12 4 3 3 3 3 3 4 5 Power 10 8 6 5 - - - 1 1 2 2 3 2 3 3 4 Metals & Mining 1 - - 0 2 4 4 5 4 4 2 2 3 4 3 3 Construction 6 5 3 1 4 4 5 5 3 3 3 4 2 2 3 3 Top 10 of Nifty 500 index 93 92 87 79 77 75 78 78 76 68 71 67 85 83 84 82 Sector rotation is missing in traditional diversified funds.
  • 6.
  • 7.
    What is Factorinvesting? 7 Stock selection based on current data Strong proven relationship with stock returns Aims to generate excess returns Long-term back testing Rule based, hence no judgemental calls Factor investing involves selecting stocks based on certain characteristics that are believed to contribute to their performance.
  • 8.
    Key factors thatdrive stock returns 8 Feature Metrics E.g.: Sound balance sheet stocks High growth with future potential Relatively inexpensive stocks Rising stocks ROE, ROCE, Debt to Equity Revenue, EBITDA, PAT growth rate Low valuation ratios like P/E, P/B 3m/6m/12m price change Maruti, Godrej Consumer, Divi’s Lab ICICI Bank, Bajaj Finance, Titan SBI, ONGC, Tata Steel Tata Motors, TVS, Trent, REC An investment factor is a specific feature of a security that explains its risk and expected return. Quality Growth Value Momentum Factors The stocks mentioned should not be construed as a recommendation and the fund may or may not have exposure to these stocks currently or in the future.
  • 9.
    Full Recovery Early Recession EarlyRecovery Full Recession An informed way of identifying business cycles 9 The above is for illustration purpose only. It demonstrates identification of business cycles using factor investing approach. The stocks mentioned should not be construed as a recommendation and the fund may or may not have exposure to these stocks currently or in the future. 1. Identify factors driving stock returns 2. Identify stocks that are doing well using factors 3. Arrive at sectors doing well in current business cycle Quality Growth Momentum HUL Divi’s Lab ITC ICICI Bank L&T HDFC Bank TVS Motor Persistent Sys Tata Motors Healthcare FMCG Banks Industrials Auto Info Tech Strengths of this approach Data and evidence backed identification of business cycle trends Focus on “What is doing well vs What will do well”
  • 10.
    Factor tilts varyacross periods 10 Factor tilts are provided basis an internal model on top 500 stocks. Value Growth Momentum Quality Momentum Growth Value Momentum Quality Quality Momentum Growth Value Momentum Quality Momentum Growth Value Growth Growth Quality Momentum Momentum Growth Momentum Quality Value Growth Momentum Momentum Value Quality Quality Quality Quality Value Value Value Value Value Value Growth Growth Growth 33% 5% 39% 0% 5% 38% -2% 9% 18% 32% 4% 27% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Momentum Quality Growth Quality Nifty 500 calendar year returns Key factor tilts for respective years
  • 11.
    Edelweiss Business CycleFund Identifying business cycles through a proprietary factor-based approach* 11 Introducing *Factor investing approach is based on internal proprietary model mentioned in the SID
  • 12.
    02 03 Introducing EdelweissBusiness Cycle Fund 12 A factor-based approach to capture trends in business cycles Investment Philosophy Key factors used in the model - Growth, Quality, Value & Momentum. Market-cap bias – Aims to maintain equal allocation between large caps and mid/small caps. 01 Our proprietary model analyses factors to spot business cycle trends. 05 06 04 The model helps in constructing a portfolio of ~60 stocks that are doing well in the current cycle. Portfolio Universe – Top 300 stocks by market capitalization. Benchmark agnostic approach with sector exposure capped at 40% and single stock exposure at 10%. Factor investing approach is based on internal proprietary model mentioned in the SID
  • 13.
    Factors used inthe process 13 Value P/E, P/B, EV/EBITDA, Dividend yield Momentum Price performance of last 3 and 12- months Growth EPS, Operating Profit & Sales growth Quality ROE, ROCE, Standard deviation The Edelweiss Business Cycle Fund evaluates businesses combining Momentum with other factors
  • 14.
    Stock selection processusing factors 14 PROCESS Risk Filters Calculate Scores Stock Selection Portfolio Construction STEPS Filter from top 300 stocks by market cap for investable universe Calculate scores for each stock across factors (Quality, Growth, Value & Momentum) Select top ranked stocks from each factor combination based on their scores (Value+Momentum; Growth+Momentum; Quality+Momentum) Construct portfolio of ~ 60 stocks across large cap and mid/ small cap universe
  • 15.
    Back-testing of proprietarymodel performance 15 Data as on 31st May 2024. Performance is based on the back testing of proprietary model gross of expenses. CAGR provided above. Past performance is not an indicator of future performance. Strategy performance (back-tested) Nifty 500 TRI 1 year 69% 35% 3 years 33% 18% 5 years 29% 18% 7 years 22% 15% 10 years 24% 15%
  • 16.
    38% 13% 53% 11% 11% 48% -6% 7% 25% 48% 1% 49% 33% 5% 39% 0% 5% 38% -2% 9% 18% 32% 4% 27% 2012 20132014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Strategy performance (back tested) Nifty 500 TRI Strategy has consistently outperformed Source: Edelweiss internal analysis. Model performance is based on the Back testing of proprietary model, gross of expenses. Past performance is not an indicator of future performance. 16 Return contribution of top 3 sectors in each calendar year: Financials 8.2% Information Technology 8.3% Consumer Discretionary 20.6% Health Care 3.2% Financials 5.7% Financials 14.3% Information Technology 1.5% Financials 4.8% Health Care 16.4% Information Technology 20.4% Industrials 5.1% Financials 15.0% Consumer Staples 8.0% Health Care 3.4% Industrials 14.4% Financials 2.8% Energy 5.4% Consumer Discretionary 11.0% Consumer Staples 1.0% Health Care 2.7% Information Technology 7.8% Materials 7.2% Consumer Staples 3.6% Industrials 11.2% Materials 7.4% Consumer Discretionary 3.1% Health Care 9.5% Consumer Discretionary 2.5% Materials 3.0% Materials 5.6% Health Care 0.9% Materials 2.5% Materials 5.4% Health Care 6.8% Materials 1.9% Consumer Discretionary 6.0% Calendar year returns
  • 17.
    -5% 0% 5% 10% 15% 20% 25% 30% 35% Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 5 year rollingreturns 100% of the times outperformed Strategy Nifty 500 TRI Back-testing of proprietary model performance 17 Nifty 500 TRI Strategy performance (back tested) Min 4% -1% Max 30% 21% Avg 19% 14% SD 15.7% 16.4% Model performance is based on the back testing of proprietary model, gross of expenses. Past performance is not an indicator of future performance. Data as on 31st May 2024.
  • 18.
    Factor based approachleads to a dynamic portfolio 18 Source: ACEMF and Edelweiss internal analysis. Factor based approach is based on internal proprietary model. Sector derived based on back testing of model portfolio Top 15 sectors for the index as on March 2024 provided above Nifty 500 Index Static sector allocation (%) Edelweiss strategy dynamic sector allocation (%) Sector Mar'21 Mar'22 Mar'23 Mar'24 Mar'21 Mar'22 Mar'23 Mar'24 Financial Services 32 29 32 28 9 3 19 22 Information Technology 13 14 11 10 20 25 3 7 Oil, Gas & Consumable Fuels 10 11 10 9 1 5 6 8 Fast Moving Consumer Goods 8 7 9 7 6 2 10 3 Automobile and Auto Components 5 4 5 7 2 5 11 11 Healthcare 5 5 5 5 22 9 5 9 Capital Goods 3 3 4 5 6 7 24 5 Power 2 3 3 4 2 6 6 10 Metals & Mining 3 4 3 3 6 9 2 3 Construction 2 2 3 3 0 0 1 1 Consumer Durables 4 4 3 3 8 2 0 5 Consumer Services 2 2 2 3 4 1 0 3 Telecommunication 2 2 2 2 1 3 0 0 Construction Materials 3 2 2 2 3 1 0 0
  • 19.
    Strategy’s dynamic sectoralrotation Note: Sector allocation of Edelweiss’ internal model demonstrated above for illustration only. Sector derived based on back testing of model portfolio. Data as on 31st May 2024. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22 Nov-22 Jan-23 Mar-23 May-23 Jul-23 Sep-23 Nov-23 Jan-24 Mar-24 May-24 Metals & Mining FMCG O&G Utilities Pharma & Healthcare Technology Consumer Discretionary CapGoods Autos Financial 19 Pharma & HC Technology Capital goods Financials
  • 20.
    6,708 13,619 15,179 20,680 16,216 50,769 0% 5% 10% 15% 20% 25% 30% 35% 40% - 10,000 20,000 30,000 40,000 50,000 60,000 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Allocation NIFTYIT - TRI Illustration: Technology exposure over the years Note: Sector allocation of Edelweiss’ internal model demonstrated above for illustration only. Source: Edelweiss internal analysis and ACE MF. Past performance is not an indicator of future performance. 20 100% 35% 200% 33% 27% 34% After a muted 2012, expanding order book, rising spends on IT in the developed world and fall of the rupee against the US dollar. Nifty IT index growth Peak allocation to IT sector in the period Tailwinds During and post pandemic, increased focus on technology. In a highly volatile and challenging environment, IT among the few sectors that performed well. Dominant factors Quality + Momentum Quality Growth + Momentum 60% 23% 110% Nifty 5O index growth
  • 21.
    8,790 15,369 8,596 15,507 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% - 5,000 10,000 15,000 20,000 25,000 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Allocation NIFTY PHARMA- TRI Illustration: Pharma & Healthcare exposure over the years Note: Sector allocation of Edelweiss’ internal model demonstrated above for illustration only. Source: Edelweiss internal analysis and ACE MF. Past performance is not an indicator of future performance. 21 75% 80% 28% 40% Strong global growth opportunity (US being the key driver), healthy earnings visibility. Nifty Pharma Index growth Peak allocation to the Pharma index in the period Tailwinds Rally in pharma stocks during Covid owing to its resilience Dominant factors Quality + Momentum Quality Nifty 5O index growth 50% 65%
  • 22.
    3,240 9,418 0% 1% 2% 3% 4% 5% 6% 7% 8% - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Allocation NIFTY PSUBANK - TRI Illustration: PSU Banks exposure over the years 22 Note: Sector allocation of Edelweiss’ internal model demonstrated above for illustration only. Source: Edelweiss internal analysis and ACE MF. Past performance is not an indicator of future performance. Healthy growth in advances, Net Interest Income (NII), reduction in gross Non- Performing Assets (NPAs) and strong growth in profitability. 200% PSU Bank Index growth Peak allocation to PSU Bank sector in the period Tailwinds 6% Dominant factors Value + Momentum Nifty 5O index growth 45%
  • 23.
    5,101 10,619 15,046 27,921 0% 5% 10% 15% 20% 25% 30% - 5,000 10,000 15,000 20,000 25,000 30,000 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Allocation NIFTY AUTO- TRI Illustration: Auto exposure over the years Note: Sector allocation of Edelweiss’ internal model demonstrated above for illustration only. Source: Edelweiss internal analysis and ACE MF. Past performance is not an indicator of future performance. 23 Excise duty cut announcement boosted sentiment towards the sector. 110% Auto Index growth Peak allocation to Auto sector in the period Tailwinds 26% Dominant factors Quality + Momentum Nifty 5O index growth 65% Pent-up demand following Covid, limited supply keeping prices high, and investor optimism about profits. 85% 14% Value + Momentum 45%
  • 24.
    8,773 19,751 30,749 57,289 0% 5% 10% 15% 20% 25% 30% 35% - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Allocation S&P BSECapital Goods - TRI Illustration: Capital goods exposure over the years Note: Sector allocation of Edelweiss’ internal model demonstrated above for illustration only. Source: Edelweiss internal analysis and ACE MF. Past performance is not an indicator of future performance. 24 Increased infrastructure push by the government with lower interest rates. 160% Capital goods Index growth Peak allocation to Capital goods sector in the period Tailwinds 10% Dominant factors Quality + Momentum Nifty 5O index growth 65% Continued government push on infrastructure, early signs of capital goods revival. 85% 30% Value + Momentum 25%
  • 25.
    2,048 3,999 4,344 9,350 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 Mar-21 Jul-21 Nov-21 Mar-22 Jul-22 Nov-22 Mar-23 Jul-23 Nov-23 Mar-24 Allocation NIFTYMETAL - TRI Illustration: Metals & Mining exposure over the years 25 Note: Sector allocation of Edelweiss’ internal model demonstrated above for illustration only. Source: Edelweiss internal analysis and ACE MF. Past performance is not an indicator of future performance. With recovery in economic activity, demand and price for metal commodities like steel, copper, aluminum rose leading to rising revenue for metal companies. 90% Nifty Metal Index growth Peak allocation to Nifty Metal in the period Tailwinds 17% Nifty 5O index growth Dominant Factors 30% Growth + Momentum 100% 8% 35% Value + Quality + Momentum Metal prices rose due to global events like Brexit, US Presidential election.
  • 26.
    0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% H1 2017 H22017 H1 2018 H2 2018 H1 2019 H2 2019 H1 2020 H2 2020 H1 2021 H2 2021 H1 2022 H2 2022 H1 2023 H2 2023 Large Cap Mid Cap Small Cap Model maintained consistent market cap allocation 26 Note: Market cap allocation of Edelweiss’ internal model demonstrated above for illustration only. AMFI market cap classification has been used above. At each rebalance, the portfolio has been equally split between large (top 100 stocks by market cap) and mid/small caps (Next 200 stocks by market cap)
  • 27.
    7% 6% 6% 5% 3%3% 3% 2% 0% 0% 0% 0% -1% -2% -4% -6% -7% -15% Capital Goods Power Financials ex Banks and NBFCs Consumer Durables Chemicals Telecommunication Realty Consumer Services Metals & Mining Public Sector Bank Automobile and Auto Components NBFC Healthcare Construction Fast Moving Consumer Goods Oil, Gas & Consumable Fuels Information Technology Private Sector Bank Model portfolio weight relative to Nifty 500 Overweight/(Underweight) Outcome of a diversified portfolio vs Index constitution 27 Absolute weight (%): Note: As on 31st May 2024. The data is based on back testing of proprietary model as mentioned in the SID. Strategy 13% 10% 12% 8% 5% 6% 4% 6% 4% 3% 8% 3% 4% 1% 3% 3% 1% 1% Nifty 500 6% 4% 6% 3% 2% 3% 1% 3% 4% 3% 7% 3% 5% 3% 7% 9% 8% 16%
  • 28.
    Stock Sector StrategyNifty 500 Overweight Indus Towers Ltd. Telecommunication 4.4 0.1 4.3 JSW Energy Ltd. Power 4.4 0.2 4.2 REC Ltd. Financials ex Banks and NBFCs 3.3 0.4 2.9 Thermax Ltd. Capital Goods 3.0 0.1 2.9 Solar Industries India Ltd. Chemicals 3.0 0.1 2.9 Torrent Power Ltd. Power 3.0 0.1 2.9 Phoenix Mills Ltd. Realty 3.0 0.2 2.8 Sundaram Finance Ltd. NBFC 3.0 0.2 2.8 Dixon Technologies (India) Ltd. Consumer Durables 3.0 0.2 2.8 Bajaj Auto Ltd. Automobile and Auto Components 3.3 0.6 2.7 Stock Sector Strategy Nifty 500 Underweight HDFC Bank Ltd. Private Sector Bank - 6.8 (6.8) Reliance Industries Ltd. Oil, Gas & Consumable Fuels - 5.7 (5.7) ICICI Bank Ltd. Private Sector Bank 1.1 4.6 (3.5) Infosys Ltd. Information Technology - 3.0 (3.0) Larsen & Toubro Ltd. Construction - 2.6 (2.6) ITC Ltd. Fast Moving Consumer Goods - 2.2 (2.2) Tata Consultancy Services Ltd. Information Technology - 2.2 (2.2) Axis Bank Ltd. Private Sector Bank - 1.9 (1.9) Kotak Mahindra Bank Ltd. Private Sector Bank - 1.5 (1.5) Mahindra & Mahindra Ltd. Automobile and Auto Components - 1.4 (1.4) Stock allocation vs Nifty 500 Top overweight stocks (%) Top underweight stocks (%) 28 Note: As on 31st May 2024. The data is based on back testing of proprietary model as mentioned in the SID.
  • 29.
    Large Mid Small %holding 40% 51% 9% Sector Name % holding Capital Goods 13% Financials ex Banks and NBFCs 12% Power 10% Consumer Durables 8% Automobile and Auto Components 8% Telecommunication 6% Consumer Services 6% Chemicals 5% Metals & Mining 4% Healthcare 4% Top 10 sector holding 74% Strategy model portfolio details Stock name Sector % holding JSW Energy Ltd. Power 4.4 Indus Towers Ltd. Telecommunication 4.4 Bajaj Auto Ltd. Automobile and Auto Components 3.3 REC Ltd. Financials ex Banks and NBFCs 3.3 Dixon Technologies (India) Ltd. Consumer Durables 3.0 Sundaram Finance Ltd. NBFC 3.0 Phoenix Mills Ltd. Realty 3.0 Torrent Power Ltd. Power 3.0 Solar Industries India Ltd. Chemicals 3.0 Thermax Ltd. Capital Goods 3.0 Total top 10 stocks 33.4 Top 10 stocks 29 Data for the model portfolio provided above as on 31st May 2024. This is for illustration purpose only. The Fund may or may not invest in the above stocks in future. The data is based on back testing of proprietary model as mentioned in the SID. Top 10 sectors # of stocks 54
  • 30.
    Factor investing expertise 30 AUMof factor-based funds ₹ 14,000 cr years of applied quantitative innovation 15 clear investment philosophy 1 Strategies being run using factors 4 Factor investment professionals 5 Note: As on 31st May 2024. The above data is for Edelweiss Balanced Advantage Fund, Edelweiss Aggressive Hybrid Fund, Edelweiss Equity Savings Fund and Edelweiss Large Cap Fund.
  • 31.
    Our Factor InvestingTeam Bharat has 18 years of experience in areas of portfolio management, macro and sector research. He has earlier worked with marquee investment banks and asset management companies. His last assignment before joining Edelweiss Asset Management Limited was with DE Shaw Group, a global hedge fund, as a senior manager working on fundamental and quantitative research ideas. He has done Master in Management Studies (MMS) in Finance from N.L. Dalmia Institute of Management and Bachelor in Engineering (BE) in Electronics and Telecom from Mumbai University. Bharat Lahoti Co-Head – Factor Investing Bhavesh Jain Co-Head – Factor Investing Bhavesh started his career with Edelweiss Asset Management in January 2008 and has over 15 years of rich experience in the financial markets. He had joined in the Low-Risk Trading team which is responsible for looking at arbitrage between SGX Nifty and NSE Nifty along with normal cash-future and index arbitrage. He has done Masters in Management Studies from N.L. Dalmia Institute – Mumbai University and MBA in Finance also from Mumbai University. 31 Supported by a team of 3 analysts
  • 32.
    Fund Features Category Sectoral/Thematic Fund Manager Mr. Bhavesh Jain Mr. Bharat Lahoti Mr. Amit Vora (For Overseas Securities) Benchmark Nifty 500 TRI Investment Objective The Fund seeks to generate long-term capital appreciation by investing predominantly in equity and equity related securities with a focus on navigating business cycles through dynamic allocation between various sectors and stocks at different stages of business cycles in the economy. There is no assurance that the investment objective of the Scheme will be achieved. Minimum Application Amount Lumpsum: Minimum of Rs. 5,000/- and multiples of Re. 1/- thereafter. On continuous basis: Minimum Rs. 100/- and in multiples of Re. 1/- thereafter. SIP: Rs. 100/- and in multiples of Re. 1/- thereafter. NFO period 9th July 2024 to 23rd July 2024 Investments Indicative Allocation (% to net assets) Equity and Equity related instruments selected on the basis of business cycle 80% to 100% Other Equity & Equity related instruments 0% to 20% Debt and money market instruments 0% to 20% Units issued by REITs and InvITs 0% to 10% 32 For mote details on the asset allocation, please refer the SID available on website.
  • 33.
    Inception date 20thAug 2009 26th June 2009 26th May 2009 AUM (Rs. cr) 11,300 1,600 900 Dominant factors Quality + Growth; Trend based Asset Allocation model Quality + Growth + Momentum Quality + Growth About the strategy 14+ years track record, 1st pure play trend-based asset allocation 14+ years track record, proven multi-factor quant model in equity stock selection 15 years track record, 1st long only fund with overlay of factor investing Since inception: Fund returns 11.04% 12.30% 14.51% Benchmark returns 10.68% 12.08% 13.75% Proven record of running factor-based strategies 33 Data as on 31st May 2024. Returns are CAGR. Regular plans considered. Numbers rounded off for ease of reference. Edelweiss Balanced Advantage Fund Edelweiss Aggressive Hybrid Fund Edelweiss Large Cap Fund
  • 34.
    Disclaimer 34 Past performance mayor may not be sustained in future and should not be used as a basis for comparison with other investments. Source: Ace-MF, Data as on May 31, 2024 Period Edelweiss Aggressive Hybrid Fund Benchmark (CRISIL Hybrid 35+65 - Aggressive Index) Additional Benchmark (Nifty 50 TR Index) Returns Value of Rs 10,000 Invested Returns Value of Rs 10,000 Invested Returns Value of Rs 10,000 Invested 1 Year 30.69% 13,078 23.03% 12,310 22.95% 12,302 3 Years 17.96% 16,423 13.16% 14,497 14.44% 14,991 5 Years 16.69% 21,655 14.25% 19,482 14.93% 20,072 Since Inception 12.30% 55,740 12.08% 54,155 12.90% 60,332 Period Edelweiss Large Cap Fund Benchmark (Nifty 100 TR Index) Additional Benchmark (Nifty 50 TR Index) Returns Value of Rs 10,000 Invested Returns Value of Rs 10,000 Invested Returns Value of Rs 10,000 Invested 1 Year 29.68% 12,978 28.86% 12,895 19.57% 11,963 3 Years 16.51% 15,821 15.48% 15,404 13.92% 14,788 5 Years 15.96% 20,981 15.66% 20,714 14.63% 19,808 Since Inception 14.51% 76,750 13.75% 69,398 13.22% 64,695 Period Edelweiss Balanced Advantage Fund Benchmark (Nifty 50 Hybrid Composite Debt 50:50 Index) Additional Benchmark (Nifty 50 TR Index) Returns Value of Rs 10,000 Invested Returns Value of Rs 10,000 Invested Returns Value of Rs 10,000 Invested 1 Year 23.43% 12,350 14.77% 11,482 22.95% 12,302 3 Years 12.66% 14,304 10.08% 13,342 14.44% 14,991 5 Years 14.30% 19,523 11.63% 17,347 14.93% 20,072 Since Inception 11.04% 47,030 10.68% 44,849 12.92% 60,355
  • 35.
    Risk-o-meters & Disclaimers 35 Thisproduct is suitable for investors who are seeking*: Scheme Risk-o-meter Benchmark Risk-o-meter To create wealth over long term and prevent capital erosion in medium term. Investment predominantly in equity and equity related securities including through arbitrage opportunities with balance exposure to debt and money market securities. To create wealth in the long term. Investment in equity and equity-related securities and fixed-income instruments. To create wealth in the long term. Investment in equity and equity-related securities including equity derivatives of the 100 largest companies by market capitalization, listed in India. *Investors should consult their financial advisers if in doubt about whether the product is suitable for them. Edelweiss Balanced Advantage Fund Edelweiss Aggressive Hybrid Fund Edelweiss Large Cap Fund NIFTY 50 Hybrid Composite Debt 50:50 Index CRISIL Hybrid 35+65 - Aggressive Index Nifty 100 TRI Investors understand that their principal will be at very high risk
  • 36.
    Risk-o-meter & Disclaimers Thisdocument 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. All opinions, figures and estimates included in this document (unless as specified in the document) are as of this date and are 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 arising from 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 the information and disclaims all liabilities, losses and damages arising out of the use of this information. The recipient of this material should rely on their investigations and take their own professional advice. Investment decisions of the AMC may not always be profitable. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. The above is the investment ideology which will be followed by the fund manager. However, this can change based on market dynamics, economic scenarios etc. For detailed investment strategy, risk factors of the schemes please refer to SID available on website. The representational logos used does not imply any affiliation or endorsement by the brands. These are for illustration purpose only. Please click on Factsheet for performance of other funds managed by the fund managers. 36 Edelweiss Business Cycle Fund is suitable for investors who are seeking^: • Long term capital appreciation • Investment in equity and equity related instruments with a focus on navigating business cycles through dynamic allocation between various sectors and stocks at different stages of business cycles in the economy. ^Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
  • 37.
    A picture containinglogo Description automatically generated Icon Description automatically generated Follow Us - Download ‘eInvest’ Mobile App - Know more, www.edelweissmf.com 37