Shriram Asset Management Company Limited, part of the Shriram Group, announced that the company will launch Shriram Multi Sector Rotation Fund, the first of its kind in the industry. This new fund aims to give capital appreciation over the medium to long term in an actively managed equity portfolio which rotates across identifiable trending sectors that are performing well. The fund’s strategy is to leverage sector rotation to capture opportunities in outperforming sectors while reducing exposure to underperforming sectors.
Fund investment approach
The focus of the fund will be to invest in minimum 3 to 6 trending sectors, based on the relative momentum of the sectors, and exiting them when indications suggest a weakening trend. The sectors will be selected based on Shriram AMC’s proprietary Enhanced Quantamental Investment (EQI) framework. Quantitative Factors will be used to shortlist trending sectors, while the sectors so identified will be vetted based on fundamentals including macro-economic parameters, investment indicators, sentiment, prices etc before final sector selection. This approach will also help decide when rotation across sectors will be require. The final sector selection with sector weights, and decision to rotate will lie with the fund manager. Once the sectors are selected in this top-down approach, stocks from each sector will be decided bottom up by the EQI strategy, with the fund manager taking the final decision on portfolio construction and rebalancing. For the awareness of investors, the sectors which the Shriram Multi Sector Rotation Fund will focus on at any given point in time will be published in the monthly fund fact sheet.
Mr. Kartik L Jain, MD & CEO, Shriram Asset Management Company Limited said, “Feedback from advisors indicates that investors often get caught in ‘sector traps’ when they invest in upcoming sectors that are trending due to macro-economic cycles or policy shifts. While their portfolio benefits from the uptrend, they usually remain invested even when the trend reverses or plateaus, due to inertia or behavioural biases. As a result of this, they may end up with lower or even negative annualised returns vs. if they had rotated their sector allocation on time.
Shriram Multi Sector Rotation Fund aims to address this investor pain point to help them avoid sector traps and instead, ride sector trends by rotating across sectors in a timely manner. Our catch line ‘Jaisa sector trend, waisa aapka portfolio’ captures this essence. This is also tax efficient for the investor as there is no capital gains tax implication when the fund manager rebalances across sectors within the scheme.”
