Marking a global first, Sahara Mutual Fund, the mutual fund arm of India’s leading business conglomerate, Sahara Group, today announced that it will soon launch a family of mutual fund schemes, featuring an innovative daily `Variable Asset Management Fee’ structure, that will offer investors a platform to participate in the surging growth opportunities presented by Indian equity markets and other related investment instruments.
The daily `Variable Asset Management Fee (AMC)’ structure - the first-of-its-kind in India, the Middle East and perhaps even the world - the new family of mutual fund schemes squarely aligns its interests with those of its investors.
The first of this family of schemes – Sahara Wealth Plus Fund– has been conceived with the primary objective of investing in equity and equity-related instruments of companies that would be wealth-builders in the long-term. Subscriptions for Sahara Wealth Plus are now open in the Middle East through to July 22, 2005.
Unveiling Sahara Wealth Plus Fund to the Middle East investors, Mr. Rajiv Shastri, Chief Executive Officer (CEO), Sahara Mutual Fund said: “Typically mutual funds operating in virtually all global markets levy a fixed Asset Management Company (AMC) fee which is payable by the investors every day regardless of how the schemes perform. With the introduction of our new family of mutual fund schemes, we are pioneering a new concept of levying a performance based AMC fee, making our funds truly mutual. Under this structure, the Asset Management Company levies a fee on the schemes only on days when it meets certain pre – specified performance criteria.”
“The daily `Variable AMC Fee’ further demonstrates our core belief of earning a fee and not simply charging it. By doing so, we are aligning our interests with those of our investors ensuring that the Asset Management Company desires performance as much as investors do.” he added.
Mr. Shastri further said that the company would ensure that all the funds in its portfolio will be operated and managed in a completely transparent manner. “The computation of the Net Asset Value (NAV) of our schemes has been outsourced to India’s leading private bank, HDFC Bank. HDFC Bank will independently compute the daily NAVs of these schemes which will be in turn posted on the Sahara Mutual Fund website along with other regulatory disclosures.”
Mr. Shastri further added: “With its large Indian diaspora, the Middle East is but a natural market for Sahara Mutual Fund. Over the next year we plan to augment our offerings through a series of niche and innovative offerings that take advantage of the vibrant and thriving business and economic scenario in India. Sahara Wealth Plus will be followed by the launch of another fund in September / October 2005 which will also be offered to regional investors.”
Additionally, Sahara Mutual Fund is also evaluating the possibility of launching an offshore fund in line with its strategy to play an active role in the key global markets. “The rapid growth in regional equity markets driven by its booming economies has also prompted us to consider launching a fund that will invest in Shariah-compliant stocks,” added Mr. Shastri.
The Wealth Plus fund proposes to invest in companies, which have the following attributes:
1. Sound track record of profitability and growth
2. Respected management and reasonable competitive advantages
3. Strong position in the segment of its business
4. Niche segment players with global competitive strength
5. Emerging businesses and companies staging a turnaround etc.
Commenting the investment strategy of the Sahara Wealth Plus Fund, Mr. Naresh Kumar Garg, Chief Investment Officer of Sahara Mutual Fund said: “The new Sahara Wealth Plus Fund will identify companies for investment, the three year average Return on Equity (ROE) of which is at least twice the annualized yield for 5-year Government of India (GOI) Security as at the close of 31st March of the previous financial year. These companies should also have a minimum market capitalization of Rs. 100 crores (AED 84.88 million) at the time of investment.”
“In order to avoid investing in a company which may show a strong ROE in the first year and lesser in future years or vice versa, investment decisions will be made on the basis of a three year average ROE. Companies with inconsistent earnings may be avoided even though they may post a higher ROE in a particular year. This is to ensure steady returns and maximize value for investors,” he said.
There is no entry load for investments above Rs. 5 crore (AED 4.24 million) in the Sahara Wealth Plus Fund while a load of 2.25 per cent will be levied on investments less than Rs 1crore (AED 848,000) and 1.75 per cent for investments between Rs1-5 crores. There will be a three-month 1.00 per cent exit load for investments over Rs5 crores. The scheme also offers a Systematic Investment Plan (SIP) at the New Fund Offer stage itself. Under this plan, investors choosing to invest a specified amount at monthly or quarterly intervals, will not be charged any entry load. However, if an investor chooses to exit from the SIP investment on or before the expiry of 365 days, an exit fee of 2.25 per cent will be levied.
About Sahara Mutual Fund
Sahara India Financial Corporation Limited is the flagship investment arm of the Sahara India Group. The company is the first Residuary Non-Banking Company (RNBC) in India that has been granted certificate of registration by RBI and is considered to be one of the leading public deposit mobilization company in the Private Sector. Sahara Asset Management Company Private Limited is the Investment Manager to Sahara Mutual Fund. Founded in 1978, Sahara India Group has over the years emerged as a multi-service and multi-product business conglomerate with diverse interests in fields such as Para Banking, Aviation, Housing, Infrastructure and Tourism, Media and Entertainment etc.
