Baroda BNP Paribas Mutual Fund has launched the Baroda BNP Paribas Value Fund, an open-ended equity scheme that follows a value investment strategy.
Value investing is all about looking for stocks with unrealised potential, Baroda BNP Paribas Mutual Fund says. The new fund offer (NFO) opened for subscription on May 17 and will close on May 31, 2023.
The performance of the fund will be benchmarked against the Nifty 500 Total Return Index, which represents the 500 largest companies by market capitalisation.
Investment Risk
The benchmark itself is categorised as having a very high risk, indicating that the principal investment in the fund carries a similar level of risk.
The scheme will primarily invest in equity and equity-related instruments (65-100 per cent), with a smaller allocation to debt and money market instruments (0-35 per cent), units issued by REITs and InvITs (0-10 per cent), and units of other mutual fund schemes (0-10 per cent). All these investment options come with their own associated risks.
NFO Details
For lump sum investments, the minimum application amount is Rs. 5,000, and additional investments can be made in multiples of Re. 1.
When opting for a systematic investment plan (SIP), the minimum application amount varies depending on the frequency. Daily, weekly, and monthly SIPs require a minimum investment of Rs. 500, while quarterly SIPs require a minimum investment of Rs. 1,500.
Investment Philosophy
The investment philosophy of the fund is to achieve long-term capital growth by selecting undervalued companies using value investing principles.
“Value investing is about identifying and investing in stocks that are under-priced to their intrinsic value. The fund aims to invest in under-valued companies which aims to generate wealth in long term,” Baroda BNP Paribas Mutual Fund said in a statement.
The fund seeks opportunities where the market price is below the intrinsic value. The fund aims to identify such stocks through own historical average valuations, or their fundamental valuations. These opportunities can arise from broad market fluctuations, sector-specific challenges, or company-specific factors.
According to the fund, value opportunities exist in equity markets at different levels. Firstly, during crises, such as the Global Financial Crisis in 2008 or the COVID meltdown in 2020, the broad market often overreacts, creating attractive opportunities across the market. Second, sector-specific challenges, such as short-term supply chain disruptions or regulatory changes can present value opportunities at the sector level.
Who Should Invest?
According to Baroda BNP Paribas Mutual fund, the fund is suitable for long-term investors seeking to create wealth by investing in value stocks with a margin of safety and diversification from growth-oriented portfolios. The fund aims to benefit from potential earnings growth and valuation re-rating.
