Edelweiss EDGE Top 100 Fund

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Edelweiss EDGE Top 100 Fund

Edelweiss Diversified Growth Equity (EDGE) Top 100 is a large-and mid-cap growth fund. Currently it has assets under management worth Rs. 12.22 crore (as on 31^st March, 2013). The fund was launched in May 2009 and is benchmarked against the CNX Nifty Index.

Fund Performance

			YTD		1-YEAR		3-YEAR		5-YEAR		Since inception
Edelweiss EDGE Top 100		1.43		15.80		7.45		--		13.12
CNX NIFTY		0.42		12.99		3.95		2.79		8.67

Figures are in %, as on 30 April, 2013; Returns above one-year in CAGR

The fund has outperformed its benchmark (CNX Nifty) in the year to date as well as in the one- and three-year periods.

			2012		2011		2010
Edelweiss EDGE Top 100		29.77		-18.57		15.96
CNX NIFTY		27.69		-24.61		17.94
Out/Under performance		2.08		6.04		-1.98

All figures are in %

In terms of calendar year returns the fund has performed better than its benchmark in the years 2012 and 2011, and under performed only in the year 2010.

Investment strategy

The fund will mostly be investing in the 100 largest corporates by market capitalization. The fund will at all times will maintain at least 65 per cent exposure to equities. Its mandate also allows the fund manager to take derivative exposures upto 50 per cent of net assets. The cumulative gross exposure through equity, debt and derivative positions will not exceed 100 per cent of the net assets of the Scheme. The fund's mandate also allows it to use quantitative model for choosing stocks for its portfolio.

Portfolio Characteristics

Number of equity holdings. The number of equity stocks held by the fund is 46 in April 2013, slightly higher than the category median of 41. The fund's equity holdings averaged 54.83 in 2012, 51.5 in 2011 and 60.5 in 2010. It has historically held more stocks than the category median.

Sector Concentration. The fund's concentration in the top three and five sectors is higher than the category median and the top 10 sectors is lower than the category median.

			Top 3		Top 5		Top 10
Edelweiss EDGE Top 100		47.41		62.77		70.97
Category Median-Diversified Equity		41.94		56.74		79.50

Company Concentration. The fund's concentration in the top three, five and 10 companies in its portfolio is lower than the category median.

			Top 3		Top 5		Top 10
Edelweiss EDGE Top 100		15.89		21.92		21.92
Category Median-Diversified Equity		18.65		28.16		46.84

Thus, based on these three criteria—number of equity holdings, sector concentration and company concentration—one can conclude that the fund maintains a diversified portfolio.

Expense Ratio. The fund's expense ratio is 2.68 per cent, which is slightly higher than the category median of 2.51 per cent.

Risk. In terms of measures of risk such as standard deviation (average of the last three years) the fund has a lower level of risk compared to the category median whereas in terms of beta (average over last three years) the fund has a slightly higher level of risk compared to the category median.

			Standard Deviation		Beta
Edelweiss EDGE Top 100		0.92		0.82
Category Median		0.94		0.80

Risk-adjusted Returns. In terms of measures of risk-adjusted return such as Treynor ratio and Sharpe ratio (average of the last three years), the fund has higher risk-adjusted returns compared to the category median.

			Treynor		Sharpe
Edelweiss EDGE Top 100		0.021		0.024
Category Median		0.004		0.007

Portfolio Strategy

In the last calendar year (From Jan-12 to Jan-13) the fund has had an average allocation of 73.06 per cent to large caps, 3.40 per cent to mid caps and 1.04 per cent to cash & cash equivalents.

	Industry		Jan-12 %Holding		Jan-13 %Holding		Raised/lowered allocation (%age points)
Bank - Public		1.37		6.00		4.63
Household & Personal Products		3.72		7.38		3.66
Automobiles-Tractors				2.79		2.79
Finance - NBFC		2.66		4.99		2.33
Finance - Investment				1.93		1.93
Mining & Minerals		1.19				-1.19
Finance - Housing		3.89		2.40		-1.49
Diversified		2.24		0.41		-1.83
Automobiles-Trucks/Lcv		2.31				-2.31
Bank - Private		17.89		13.04		-4.85

In the last year the fund has increased allocation the maximum to Banking (Public), Household and Personal Products, Automobiles (Tractors), Finance (NBFC) and Finance (Investment). It has lowered allocation maximum to Bank (Private), Automobiles-Trucks/Lcv, Diversified, Finance (Housing), and Mining & Minerals.

Domestic Equities (Hold Percentage)

	Company Name		Jan-13		Jan-12		Raised/lowered allocation (%age points)
Reliance Industries Ltd.		2.38		3.84		1.46
Bharti Airtel Ltd.		1.78		3.10		1.31
Tata Consultancy Services Ltd.		1.28		2.31		1.03
Hindustan Unilever Ltd.		0.38		1.13		0.75
Tata Steel Ltd.		0.53		1.18		0.65
HCL Technologies Ltd.		0.82		0.17		-0.65
ICICI Bank Ltd.		5.43		4.68		-0.75
ITC Ltd.		2.79		1.99		-0.80
NMDC Ltd		0.90		0.05		-0.85
Larsen & Toubro Ltd.		2.12		1.00		-1.12

Among its top holdings, the fund increased its exposure maximum to Reliance Industries Ltd., Bharti Airtel Ltd., Tata Consultancy Services Ltd., Hindustan Unilever Ltd., and Tata Steel Ltd. It lowered the exposure maximum to Larsen & Toubro Ltd., NMDC Ltd, ITC Ltd., ICICI Bank Ltd. and HCL Technologies Ltd.

Fund Manager

Paul Parampreet is the fund manager of this fund since February 2010. He has over 5 years of experience. Prior to this, he worked with Edelweiss Securities in Asset Management function, with SDG India Pvt. Ltd., with ICICI Bank and with BG India Pvt. Ltd.

Conclusion

This fund has outperformed its benchmark in two out of the three complete calendar years of its existence. The fund has potential to perform in the near term although as it combines the quantitative and qualitative style, the fund's investment strategy's success will be on the skill of the fund manager completely.

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