FUND PHILOSOPHY*

The focus of IDFC Sterling Value Fund has been on building a portfolio of Leader/Challengers and Emerging businesses with an emphasis on bottom up stock selection. As part of the current strategy, the portfolio looks to build on the leaders/challengers – these are the market leaders in the Non-Nifty sectors (like Tyres, Bearings) or Top Challengers in the Nifty sectors (such as FMCG, Banks). The key parameters that we look at while selecting the companies here are low debt to operating cash flow and ROIC (Return on Invested Capital) greater than the Cost of Capital (CoC). The other part of the portfolio focuses on the Emerging Businesses. These are businesses in down cycles or where scale is yet to be achieved or where companies can fund growth without repeated dilutions. Many a times, earnings do not capture fair value of the businesses in down cycles or that are yet to achieve scale and hence popular ratios such as P/E ratio might not be the relevant metric to value the company. Thus, we believe that a better parameter for relative value evaluation could be the Enterprise Value (EV)/Sales ratio & Price/Book (P/B). We also filter stocks for Sustained improvement in RoE (Return on Equity) and RoCE (Return on Capital Employed) and those with Earnings Growth higher than Nifty. This segregation helps in easy management of risk & liquidity aspects of the portfolio.

      OUTLOOK

Q3 FY22 results have been largely encouraging, demand remained strong while, EBIDTA margin has compressed largely on account of the inflation across commodities. However, lower finance costs and robust cash generation has boosted profitability. Indian corporates, including Banks, enter FY23 with the strongest balance sheet probably since FY12.

Near term worries post the Ukraine-Russia conflict have stoked fears of further dislocation in supply chain, especially Gas, key industrial Metals and Agri Commodities. As a result, commodity prices have soared, with Brent crossing $110/barrel levels. This could affect inflation in the coming months. In this context, a swift resolution to peace could be critical, as levers to boost supply of these commodities from RoW remain limited. The ferocity of the move in inflation could dampen investor sentiments. For equity investors, conflicts and wars have been phases of mixed emotion – during the crisis, regret of being fully invested (RoFI) and once past the crisis, regret of missed opportunities (FOMO). Looking back, continuing with one’s equity investments through such crisis generally has been the ideal strategy.

     FUND FEATURES: (Data as on 28th February'22)

Category: Value
Monthly Avg AUM: Rs4,433.72 Crores
Inception Date: 7th March 2008
Fund Manager:
Mr. Anoop Bhaskar (w.e.f. 30/04/2016) & Mr. Daylynn Pinto (w.e.f. 20/10/2016)
Other Parameters:
Beta: 1.27
R Square: 0.88
Standard Deviation (Annualized): 29.85%
Benchmark: Tier 1: S&P BSE 500 TRI (w.e.f. 28th Dec, 2021) Tier 2: S&P BSE 400 MidSmallCap TRI
Minimum Investment Amount: Rs5,000/- and any amount thereafter.
Exit Load:
• If redeemed/switched out within 365 days from the date of allotment:
➧ Upto 10% of investment:Nil,
➧ For remaining investment: 1% of applicable NAV.
•If redeemed / switched out after 365 days from date of allotment: Nil. (w.e.f. May 08, 2020)
SIP Frequency Monthly (Investor may choose any day of the month except 29th, 30th and 31st as the date of instalment.)
Options Available: Growth, IDCW@ (Payout, Reinvestment and Sweep (from Equity Schemes to Debt Schemes only))

PORTFOLIO

(28 February 2022)

     SECTOR ALLOCATION

     RISKOMETER

Scheme risk-o-meter

Benchmark risk-o-meter

Benchmark risk-o-meter