AssetPlus NFO Review - ITI Value Fund

by Anushi Jain

ITI Mutual Fund is launching an NFO, which is open for subscription from May 25th, 2021 to June 8th, 2021.

Investment Objective: The investment objective of the scheme is to seek to generate long term capital appreciation by investing  substantially in a portfolio of equity and equity related instruments by following value investing strategy.

Investment Strategy: The scheme follows value investing wherein they pick stocks whose market price is significantly below its intrinsic value. The fund can pick stocks across all market caps without any restriction.

Fund Manager: Mr. Pradeep Gokhale and Mr. Rohan Korde

Benchmark: Nifty 500 TRI

Fund Management Process:

  1. The fund follows the philosophy of GARP - Growth at a Reasonable Price

2. The fund will look for stocks that meet some of the below requirements

  • Great companies going through temporary tough times and trading at prices significantly below their intrinsic value
  • Emerging Sectors with growth potential available at significant value
  • Cyclical stocks trading at bottom of the business cycle
  • Companies going through business or management restructuring

3. The fund will pick stocks that are quality businesses, have low debt, high cash flows and are expecting turnaround in their model in the near-term.

Based on our analysis, we have observed the following pros and cons

Pros:

  1. Suitable for the current high market valuations
  2. Strong fundamentals in place which will help avoid value traps
  3. Value stocks are usually lower in risk and volatility during market downturns

Cons:

  1. The core theme is to invest in companies that are currently facing issues and holding them till they turnaround. This requires high precision in timing the entry and exit and also evaluating business potential.
  2. Value stocks can go through long periods of underperformance before giving high returns.

Value stocks have made a comeback in the last few months after a long period of underperformance. With current market levels at a high, value stocks may give higher risk-adjusted returns than growth stocks over the next few years. Equity investors with conservative to moderate risk appetite can add a value fund in their portfolio as a diversification tool.

It is of utmost importance that the fund should be discussed with your financial advisor and then ascertain whether it is suitable to invest. Always read the scheme documents fully before investing.