DECODED: JPMorgan India Top 100 Fund
Jun 06 2014
WHAT IS IT: JPMorgan India Top 100 Fund (JPMIT100F) is an open-ended equity diversified large-cap fund. Like most of its peers, it aims togenerate long-term returns for investors.
NFO PERIOD:June 2 to 16
ASSET ALLOCATION & BENCHMARK: Top 100 companies by market cap, meaning largest 100 largecap stocks,will get the new fund's allocation of a minimum of 80 per cent and can get up to the full extent of 100 per cent. Other companies, beyond the 100 largest largecap, get an investment allocation of up to 20 per cent,while debt and money market investments also get an allocation of upto 20 per cent. Benchmark of the new scheme is S&P BSE 100 index.
EXPENSE RATIO: It can go as high as 3.12 per cent.
FC VERDICT: JPMorgan India Mutual Fund already has two open-ended equity diversified funds, one being a multi-cap fund and the other being a mid-and-smallcap fund. JPMIT100F will make JPMorgan India MF like a typical Indian mutual fund which tends to confuse investors seeking a simple equity exposure by offering them equity funds investing into equities based on their market capitalisation and not on the basis of their growth and value potential. In an ideal world, a mutual fund investor seeking an equity exposure ought to be primarily and pre-dominantly in a multicap fund and be assured that the energies of the fund manager of her fund are fully channelised into this fund. But, in reality, the Indian MF industry's biggest to smallest players love to muddle the field by offering largecap funds, midcap funds and smallcap funds along with a multicap fund. Many multicap fund managers worsen the scenario by having more than 80 per cent of their multi-cap fund portfolio deployed in largecap stocks. A consequence is that an investor finds it difficult to know whether a MF's multicap fund and largecap fund are truly different or not.
JPMIT100F will compete with its seven-year-old in-house peer, JPMorganIndia Equity Fund (JPMIEF), which is a multicap open-ended equity fund. The fund managers for both will be the same. Already, JPMIEF has deployed almost 70 per cent of its corpus in large-cap stocks having a market cap of Rs 50,000 crore or more. JPMIT100F will ensure large-cap exposure is at least 80 per cent. So to that extent it will be different from JMPIEF but only narrowly so. In terms of track record, JPMIEF, as on June 5, ranked 22nd out of 46 multi-cap funds in 5-year CAGR of return. You will have to hope the new JMPMIT100F performsbetter among largecap funds in the next few years.
— Rajesh Gajra